FPIs Record Inflow of Rs 3,727 Crore In August So Far; Which Indian Stocks They Like?

Foreign portfolio investors (FPI) have shown a volatile appetite for Indian stocks so far in August. After being net sellers in the first week of the current month, FPIs were buyers by the end of the second week. As per NSDL data, FPIs have broadly bought Rs 3,272 crore from the August 7th to 11th trading session despite the Sensex and Nifty 50 ended on a bearish note.

Data from NSDL showed that FPIs infused Rs 3,272 crore in the trading week that ended on August 11, this was compared to net selling of Rs 2,034 crore from August 1st to 4th.

While they held an appetite for the debt market an inflow of Rs 2,860 crore so far in August, however, were net sellers of debt-VRR with an outflow of Rs 478 crore. Nevertheless, FPIs were buyers of hybrid instruments to Rs 588 crore.

However, it is being said that FPIs have been broadly net sellers in August. Dr V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services said, "After three months of sustained buying with a cumulative investment of Rs 1,37,603 crore, FPIs have turned sellers in India. In August through 11th FPIs have sold stocks to the tune of Rs 7543 crore."

Among the stocks that FPIs are preferring, the strategist said, FPIs continue to be buyers in financials, capital goods and financials and also in IT selectively. A significant trend in the market is that FPI selling is countered by strong DII buying.

On Friday, Sensex ended at 65,322.65, down by 365.53 points or 0.56%, while Nifty finished at 19,428.30, lower by 114.80 points or 0.59%. The rupee ended at 82.8450 per dollar, depreciating by 0.16% alongside its Asian peers.

In the trading week that ended on August 11, Sensex tumbled by 499.32 points or 0.76%, while Nifty 50 shed 123.30 points or 0.63%. The rupee closed the week with a 0.12% drop against the US dollar index.

However, according to Vijayakumar, strength in the dollar index and the US 10-year bond yield remaining well above 4 % is a short-term negative for FPI flows to emerging markets like India.

Going ahead, he added, "In view of the strong dollar and high US bond yields FPIs may continue to sell in India. Also, since the markets have rallied smartly during the last three months, some profit booking by FPIs would be rational and can be expected."

In July, FPIs bought Rs 46,618 crore worth of equities, making it the second-highest monthly buying of 2023 after June 2023 when it invested Rs 47,148 crore in shares.

Year-to-date, FPIs buying in Indian stocks stood at Rs 1,26,297 crore.