New Delhi: After turning net buyers last month, foreign investors have become aggressive buyers of Indian equities, investing Rs 22,452 crore in the first two weeks of August over concerns about inflation.

This was significantly more than the net investment of approximately Rs 5,000 crore by Foreign Portfolio Investors (FPIs) in the entire month of July, according to data from depositories.

After nine consecutive months of significant net outflows beginning in October of last year, FPIs began to turn positive in July.
In the Indian equities markets, FPIs sold a total of Rs 2.46 lakh crore between October 2021 and June 2022.

According to Shrikant Chouhan, Head Of Equity Research (Retail), Kotak Securities, foreign capital inflows to emerging markets are projected to strengthen in the future due to waning concerns over rising inflation and central banks tightening monetary policy.

In July, food prices moderated, bringing India’s retail inflation down to 6.71 percent, although it remained above the Reserve Bank’s comfort zone of 6 percent for the seventh consecutive month.

Due to decreasing gasoline costs, US inflation decreased from a 40-year high in June to 8.5 percent in July, suggesting that the US Fed may be less aggressive in raising interest rates.

“As long as energy prices remain low and there are no surprises from the war zone, foreign flow is likely to continue,” Vijay Singhania, chairman at TradeSmart, said.

The benchmark for world oil, Brent crude futures, is now trading at roughly USD 98 per barrel.
Data from depositories show that between August 1 and 12, FPIs invested a net amount of Rs 22,452 crore in Indian stocks.

Because FPIs have continued to invest, the sentiment in the equity market has changed to one of optimism.

“Depreciation in dollar (dollar index declined from above 109 during late July to around 105.26 on August 12th) is the primary driver of capital flows to emerging markets,” VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said.