Foreign Investors Boost Indian Stock Market to New Highs
Foreign portfolio investors (FPIs) have continued their buying spree in Indian stock markets for the second month, with net investments reaching Rs 32,365 crore in July, according to data from the National Securities Depository Limited.
In June, FPIs bought stocks worth Rs 26,565 crore. This influx of foreign investment has helped indices like Sensex and Nifty reach record highs, with Nifty touching the 25,000 mark for the first time. The index has gained approximately 11% over the past three months, driven by robust GDP growth, controlled inflation, strong domestic liquidity, and favorable monsoon conditions.
FPI activity in June and July was influenced by the smooth formation of the new government. In the two months preceding June and July, FPIs were net sellers in India, but domestic institutional investors remained net buyers, compensating for the outflows.
VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, noted that FPIs might consider pulling more money out of India due to its high valuation as an emerging market. He added that developments in the US economy and markets would set the trend for FPI in August.
Vipul Bhowar, Director of Listed Investments at Waterfield Advisors, mentioned that FPIs might prioritize sectors benefiting from domestic reforms and growth, such as technology and infrastructure, while being cautious about sectors vulnerable to global economic downturns.
Milind Muchhala, Executive Director at Julius Baer India, observed mixed activity by FPIs, with bouts of buying and selling likely to continue. He stated that FPI activity would remain influenced by global equity market performance, dollar index movements, geopolitical events, and opportunities in the Indian markets considering slightly elevated valuation levels.
Doubts Revealed
Foreign Investors -: Foreign investors are people or companies from other countries who put their money into businesses or markets in India to make a profit.
Stock Market -: The stock market is a place where people buy and sell shares of companies. When you own a share, you own a small part of that company.
FPIs -: FPIs stands for Foreign Portfolio Investors. These are investors from other countries who invest in Indian stocks, bonds, or other financial assets.
Rs 32,365 crore -: Rs 32,365 crore is a large amount of money. One crore is equal to 10 million, so this amount is 32,365 times 10 million rupees.
Sensex -: Sensex is a stock market index in India. It shows how the stocks of 30 big companies listed on the Bombay Stock Exchange (BSE) are performing.
Nifty -: Nifty is another stock market index in India. It shows how the stocks of 50 big companies listed on the National Stock Exchange (NSE) are performing.
25,000 mark -: The 25,000 mark means that the Nifty index has reached a value of 25,000 points, which is a record high.
Domestic reforms -: Domestic reforms are changes made by the Indian government to improve the economy, like making it easier to do business or improving infrastructure.
Global economic downturns -: Global economic downturns are times when the economies of many countries are not doing well, which can affect businesses and markets worldwide.
