NEW DELHI: Foreign portfolio investors (FPIs) are likely to sustain the buying trend amid India’s improving GDP growth and earnings growth perspective, according to analysts.
Total FPI buying stood at Rs 23,543 crore this month (till August 22), of which, Rs 14,117 crore was through exchanges and Rs 9,426 crore was through “primary market and others category”.
The factors that are driving the FPIs back to the Indian market are earnings growth revival as reflected in Q1 results, FPI withdrawal from the ‘chip trade’, rupee stability and the impressive growth prospects of companies in the broader market, said market experts.
“A significant trend in the market is that FPIs are not buying attractively valued leading large banking or IT stocks. Instead, they are selectively buying mid-caps despite elevated valuations,” said Dr VK Vijayakumar, Chief Investment Strategist, Geojit Investments Ltd.
A headwind, however, is the high bond yields in the US which is negative for equities, he mentioned.
Indian equity markets ended the week on a cautious note, extending their recent corrective phase as elevated crude oil prices, rising global bond yields and persistent geopolitical uncertainty weighed on investor sentiment.
Markets remained volatile, with benchmark indices recovering during the week before ending Friday largely flat as investors continued to assess the global risk environment.
Investors are closely monitoring the US Federal Reserve's policy outlook, particularly ahead of the Jackson Hole symposium, where monetary policy guidance is expected to remain a key global market catalyst, according to Ajit Mishra–SVP, Research, Religare Broking Ltd.
Sectoral performance remained mixed, with defensive positioning and stock-specific buying dominating market activity. Realty, metal and banking performed relatively well, supported by improving sentiment towards these segments.
In contrast, IT stocks remained under pressure, declining around 2.6 per cent during the week amid concerns over US inflation, elevated bond yields and the global technology spending environment. FMCG and energy stocks also remained subdued.
On the domestic front, investors will track crude oil prices, rupee movements, foreign institutional flows and domestic liquidity conditions, said analysts.