FPI inflows hit 10-month high in June, power Sensex, Nifty to record levels

Foreign portfolio investor (FPI) inflows in Indian equities hit a 10-month high of Rs 45,286 crore ($5.49 billion) in June, data from the National Securities Depository Ltd (NSDL) showed on Thursday.

Over three-fourths of the purchase, aggregating Rs 34,025 crore, occurred in the second half of June, propelling India's stock benchmarks to record highs by the end of the month.

Both the Nifty 50 and the S&P BSE Sensex rose more than 3 per cent last month.

So far FPIs were net buyers in each of the three months of fiscal 2024, adding equities worth over Rs 1 lakh crore. The Nifty 50 rose nearly 11 per cent in the June quarter, which was "entirely supported by foreign inflows," analysts at Goldman Sachs said in a note.

"The pause in the Fed's rate hike cycle, strong macro-economic outlook, stable corporate earnings, concerns over recovery in China have aided flows into Indian markets," said Pratik Gupta, CEO and co-head at Kotak Institutional Equities.

What FPIs bought in June

FPIs bought equities worth Rs 19,229 crore in June in financial services companies after selling Rs 29,993 crore of shares in the sector in fiscal 2023.

They bought financial stocks worth Rs 17,671 crore in May and Rs 7,690 crore in April.

Auto, capital goods and consumer durables also witnessed interest from FPIs throughout June, while buying emerged in power and metal stocks in the second half of the month.

Persistent inflows powered financials, auto and fast-moving consumer goods indexes to all-time highs last month.

The sell-off in information technology stocks persisted, although the selling moderated in the second half of June.

The divergence in performance between the two high-weighted sectors - IT and financials - will persist, according to domestic brokerage firm Motilal Oswal Financial Services.

IT earnings are likely to remain subdued in the second half of 2023 amid concerns over an economic slowdown in key markets of the United States and Europe, three analysts said.

($1 = Rs 82.45)