Foreign investors likely to continue buying in India as GDP growth, earnings improve
New Delhi, Aug 9
Given the improving prospects in GDP growth and earnings growth in India, foreign portfolio investors are likely to continue their buying in India, according to analysts.
The trend of FPIs turning buyers in India, which was pronounced in July, continued in August too, so far.
Through August 7, FPIs bought equities worth Rs 12,920 crore, of which Rs 8,195 crore was through exchanges and Rs 4,125 crore was through the 'primary market and others' category.
FPIs continued to invest in the debt market through the Debt General limit.
"An important trend in the FPI equity buying is their preference for sectors like automobiles, consumer durables and health care," said Dr VK Vijayakumar, Chief Investment Strategist, Geojit Investments Ltd.
The Q1 FY27 results of these sectors also indicate good earnings growth which justify the FPI accumulation in these sectors.
FPIs continued their investment in mid and small-cap growth stocks across sectors.
Given the improving prospects in GDP growth and earnings growth in India, FPIs are likely to continue their buying in India.
"But this is only to become a major trend since the US bond yields (the 10-year is at 4.67 per cent) are high. This has the potential to attract lot of funds to the safe US bond markets," said the analyst.
Meanwhile, markets ended the week with modest gains despite heightened volatility, as investors navigated the rollout of the new Closing Auction Session (CAS) framework for F&O stocks, the Reserve Bank of India's monetary policy decision, and lingering geopolitical uncertainties.
For the week, the Sensex gained 0.52 per cent to close at 78,499.17, while the Nifty advanced 0.77 per cent to settle at 24,570.65.
Broader markets outperformed the benchmark indices, with the midcap and smallcap indices rising 0.81 per cent and 2.61 per cent, respectively, reflecting sustained stock-specific buying beyond large-cap names.
The market enters the coming week with a balanced outlook, supported by resilient domestic fundamentals, a stable monetary policy, and an encouraging start to the earnings season.
— IANS
Reader Comments
This is reassuring news for retail investors. The midcap and smallcap rally of 2.61% shows the market is broadening beyond just the big names. But I do wish the article had discussed how political stability is playing a role in this FPI confidence too. That's a major factor many global investors consider.
Interesting to see the resilience of Indian markets despite global uncertainty. The new Closing Auction Session framework is a significant structural change - it's good to see the market absorbing this smoothly. Still cautious about the geopolitical risks mentioned, but India's growth story remains compelling.
I've been tracking FPI data for years now. The 'primary market and others' category at Rs 4,125 crore is notable - suggests strong interest in IPOs and QIPs. Our manufacturing sector is really benefiting from the China+1 strategy. Let's hope the government maintains policy consistency to keep this momentum going.
While the headline numbers are encouraging, I'm concerned about the concentration in specific sectors. Healthcare and consumer durables are defensive plays - what happens to FPI interest if these valuations get stretched? Also, the RBI's stable policy stance is good, but inflation remains a lurking challenge.
Smart money is following the earnings trail - that's what fundamentally sound markets are about. Our Q1 results have been solid across sectors. The 4.67% US yield watch is important, but India's growth premium justifies these valuations. Long-term investors should stay the course.
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.