Foreign investors (FPIs) exhibit unwavering interest in the Indian stock market, having infused a significant Rs 43,800 crore in July alone. This influx is driven by the market’s stable macroeconomic fundamentals, steady earnings growth, and the challenges faced by the Chinese economy. As a result, the total investment in the equity market has now reached an impressive Rs 1.2 trillion this year, as per data from depositories. Market experts remain optimistic about the possibility of further investment in Indian stocks by foreign investors.
Driven by Strong Fundamentals
While the consistent inflow of foreign investment has propelled the Indian stock markets to record highs, concerns have emerged regarding the escalating valuations. Market experts caution that a negative trigger relating to these valuations could lead to a sharp correction. Despite this potential risk, experts believe that intermittent profit booking may be inevitable in the future. According to available data, FPIs have been persistently purchasing Indian stocks since March, with a total investment of Rs 43,804 crore in July until the 21st.
A Closer Look at FPIs’ Interest
This marks the third consecutive month where foreign investment has crossed the Rs 40,000 crore threshold, having been Rs 47,148 crore in June and Rs 43,838 crore in May. The total investment figure encompasses various channels, including wholesale deals and the primary market, in addition to stock exchanges. Prior to March, foreign investors had collectively withdrawn Rs 34,626 crore in January and February. Despite past fluctuations, experts highlight the attractive investment prospects in Indian stocks due to their stable earnings growth, strong macroeconomic fundamentals, and the ongoing challenges faced by the Chinese economy.
Expert Insights on Potential Market Correction
Furthermore, foreign investors have also infused Rs 2,623 crore into the Indian debt market, alongside their stock market investments. FPIs continue to diversify their investments across several sectors, including finance, automobile, capital goods, realty, and FMCG. The diverse investment landscape underscores the confidence foreign investors have in India’s growth potential.
The Indian stock market continues to attract foreign investors due to its stable economic backdrop and growth prospects. While concerns about rising valuations persist, the overall sentiment remains positive, with experts anticipating further investment in the coming months.