How has been the FPI action in the Indian markets in the month of June 2020?
Answer
Answer
FPIs have pumped in Rs.21,235 crore into the domestic Indian markets even as global liquidity has been abundant although the concerns over emerging markets continue. Based on data provided by NSDL and CDSL, FPIs invested Rs.22,893 crore into equities but pulled out Rs.1658 crore from till June 26. This is a clear reversal of Mar-May period.
It may be recollected that FPIs were net sellers for three consecutive months between March 2020 and May 2020. They pulled out Rs.7366 crore in May 2020, net sum of Rs.5403 crore in April and a record Rs.115,000 crore in March this year. The latest trend is that FPIs are increasing their investments in small- and mid-cap stocks.
Most FPIs still find the valuations in India quite attractive which is a good buying opportunity for them. From a long-term investment horizon, Indian equities are a solid investment option for FPIs as they stand to gain from the post-COVID bounce in Indian markets. India could also be the one nation to benefit from the surge in global liquidity.
June may not exactly be indicative of the coming months as a lot will depend on how soon India gets out of the COVID situation and is able to get growth back on track. That could hold the key.