FPIs invested ₹11,763 crore in the Indian market in July, the highest since April 2022. The NSDL reclassification has brought the number of sectors on the National Stock Exchange and Bombay Stock Exchange down to 22 from 35 earlier by collapsing all IT companies into one sector from being classified under software, services, and hardware earlier.
Interest in IT stocks by FPIs also follows hopes of a possible cut in interest rates by the US Federal Reserve in September, which, in turn, would encourage companies to spend more on IT. The IT stocks have been on an uptrend for the last one month too, with TCS gaining nearly 5 per cent, Infosys rising about 5.5 per cent and HCL Tech moving up by 3.5 per cent.
In contrast to BSE Sensex and NSE Nifty, the broader market indices, both a shade negative at around 1% and 0.5%, respectively, while Nifty IT alone had surged a solid 13% in July for its best month since August 2021.
In all, money invested by FPIs in both equity and debt combined stood at ₹54,727 crore in July, with ₹32,364 crore coming into equities and ₹22,363 crore into the debt market, NSDL data showed. Offshore equity market trends, dollar index, geopolitical events, and the available investment opportunities in the Indian market at comparative high valuation levels govern the flows of FPI investments.
According to experts, this massive inflow is being fuelled by three major reasons: strong economic prospects, expectation of rate cuts and disciplined fiscal policies carried out by the government. The Economic Survey tabled in Parliament before this year's Union Budget had estimated that India's growth rate would be between 6.5 per cent and 7 per cent in the 2024-25 financial year.
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