FPIs Pour ₹20,200 Crore into Indian Equities Amid Global Rate Expectations

Foreign portfolio investors (FPIs) have returned to Indian equities in July with a net inflow of ₹20,200 crore, marking a shift from the previous four-month streak of outflows. This change is attributed to stable market conditions, improved corporate earnings, and changing global interest rate expectations.

The renewed interest suggests that global investors are recalibrating their positions in Indian large-cap stocks, drawn by what some market analysts describe as more reasonable valuations compared to the volatility seen in other emerging markets.

Earnings from the April-June quarter provided comfort to investors, particularly in the IT sector, which had been under scrutiny due to global tech spending concerns. The softening of the US dollar and anticipation that US interest rate hikes may be peaking have historically encouraged investors to move funds into emerging markets like India.

Moreover, foreign investors showed strong interest in Indian debt instruments, funneling ₹29,212 crore into the general debt route and an additional ₹3,033 crore through the fully accessible route. This indicates that FPIs are not limited to equity risk but also seek stable returns from fixed-income assets.