June Starts With FPIs’ Optimism! Will the Trend Continue?

FPI inflow

The inflow trend of the past three months is now seen in June 2023 as well. But, will this trend persist, or is it merely a fleeting fad?

The past three months were filled with excitement for the markets as Foreign Portfolio Investors (FPIs) optimism rallied the Indian equity market. With the inflow of investments amounting to Rs 7,936 crores in March, Rs 11,631 crores in April, and an astounding Rs 43,838 crores in May, it’s clear that May emerged as a superpower month, attracting nearly 3.7% more FPI inflows than April 2023. 

However, the path to this impressive surge was challenging because, in January and February 2023, FPIs emerged as net sellers. Thanks to the investment management firm GQG Partners, the tide turned in March as they injected a substantial sum of Rs 15,446 crore into four Adani group stocks.

The inflow trend of the past three months is also seen in June 2023. The question arises: will this trend persist, or is it merely a fleeting fad? 

Let’s find out.

What’s Happening?

The inflows of the past three months infused the market with a sense of optimism, setting the stage for a significant rally. As June began, the momentum continued, with impressive FPI inflows witnessed within just two trading days infusing Rs 6,489 in equities. 

Reason Behind This Optimism

According to Bloomberg, India is seen as an attractive destination among all emerging markets, and hence it attracted the highest inflow among other emerging markets in recent months. 

This optimism is largely driven by a good earnings season, reasonable valuation and strong domestic macroeconomic outlook amid difficult global economic conditions. 

Secondly, in April 2023, the MPC decided to pause for the first time in the ongoing rate hike cycle. Since then, the retail inflation number has slimmed down to an 18-month low. Falling inflation and RBI’s neutral stance will benefit businesses, giving FPIs another reason to stay invested in the Indian markets. 

What’s Next?

While the current trend of FPI inflows appears optimistic, the outcome is contingent upon certain crucial factors. The upcoming Federal Reserve meeting on the 13th and 14th of June holds significant importance, as any decision regarding a rate hike may impact the attractiveness of the US market, potentially resulting in FPI outflows. India’s growth outlook must also remain robust to sustain FPI interest and ensure a positive trajectory. 

That’s it for today. We hope you’ve found this article informative. Remember to spread the word among your friends. Until we meet again, stay curious!

*The article is for information purposes only. This is not investment advice.

*Disclaimer: https://tejimandi.com/disclaimer  

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