“FII flows will continue to be erratic, influenced by global factors. Better-than-expected results from IT majors who have come out with results so far indicate potential for FII buying in these stocks where valuations are not excessive,” Dr VK Vijayakumar of Geojit Financial Services, said.
While domestic investors, led by mutual funds, have been sustained buyers in all months of calendar year 2024 so far, FIIs have alternated between buying and selling.
“FIIs were sellers in January, April and May (cumulative selling of Rs 60000 crores) and buyers in February, March and June ( cumulative buying of Rs 63200 crores ). The reason for this divergence is that FII activity is influenced by external factors like US bond yields and valuations in other markets while DII activity is largely driven by domestic flows into the market,” Vijayakumar said.
Higher participation by FIIs is one of the key reasons behind the sustained rise of Sensex and Nifty which ended in the green for the sixth consecutive week to end at fresh record highs on Friday.The Q1 earnings season has also kicked-off on a good note with TCS‘s performance positively surprising the street leading to 4.5% jump in Nifty IT index in a single day. “The reason for a quick rebound in the capital markets can be attributed to the positive sentiments, stable government’s assurance on continuity of reforms, tepid US Fed rates and a strong domestic demand. The recent announcements in IFSC Gift City for wide participation for foreign and Indian investors has also diverted the international players to allocate a substantial portion of their global portfolio to India markets,” said Manoj Purohit of BDO India.All eyes are on the much-awaited Budget proposals to be tabled on July 23.
