According to the latest data with the depositories, the foreign investors have pumped in Rs. 15,352 crore in equities this month (till July 12). They are in a bullish mode mainly driven by strong domestic demand, government’s commitment towards reforms and low federal rates.
This news comes as a follow up to the recent bullish trend in the market. Recently, SENSEX soared 1000 points on July 12th due to surge in IT stocks. NIFTY also gained 219 points in the last session of the current week. Overall, SENSEX gained 996 points and reached a record high of 80,893 and NIFTY crossed 24,500 mark for the first time.
In fact, the BSE market capitalisation reached Rs 454 lakh crore on July 12 compared to the Rs. 451 lakh crore in previous session. This time as many as 230 stocks hit their 52 week high on the BSE.
Riding The Bull…
The FPI’s had invested Rs. 26,565 crore in equities in the month of June, mainly on account of political stability. For earlier in the month of May, they had withdrawn Rs. 25,586 crore due to poll jitters. They had also withdrawn Rs. 8,700 crore in April due to concerns over India-Mauritius tax treaty plus sustained rise in US bond yields.
According to Mr. Himanshu Srivastava, Associate Director at Morningstar Investment Research India, the investor sentiment is high. He stated that this is because they anticipate a reform oriented budget 2024-25. Thus, union budget 2014-25 will be the most watched event.
Riding the bull, apart from equities, FPI’s have also invested in debt market during this time. In total the FPI’s have invested Rs. 77,109 crores in debt market this year. The Domestic Institutional Investors (DII’s) on the other hand, have been consistently growing especially in the mutual funds. They have been consistent buyers compared to FPI’s who fluctuate between buying and selling. So far, the FPI’s have invested Rs. 63,200 crore in February, March and June combined. This boost in foreign investors confidence is on account of a stable government, assurance on continuity of reforms, low Federal rates and a strong domestic demand.
As per Mr. Abhishek Banerjee, Smallcase Manager and founder at Lotusdew, FPI’s have a great opportunity in India as they get high returns in foreign currency. However, as the Chinese markets are much cheaper so time will tell whether the foreign investors will choose momentum or will go for value. Overall, things seem to be moving in the right direction, in fact recently, India’s FOREX kitty jumped by $5.16 billion to hit an all-time high of $657.16 billion as of July 5th (RBI’s data).