NEW DELHI, Aug 24: Foreign portfolio investors have stepped up purchases of Indian equities in August, investing around Rs 23,544 crore during the month as improving corporate earnings and a relatively stable rupee strengthened market sentiment.
The renewed buying marks a significant change from periods of heavy foreign selling seen earlier in the year. Investors have increasingly responded to better earnings expectations and India’s comparatively resilient economic outlook.
The inflows have also provided support to domestic financial markets at a time when global investors are closely monitoring geopolitical tensions, oil prices and monetary policy.
Earnings boost investor confidence
Improved quarterly corporate results have been an important factor behind the stronger overseas participation.
Investors are also assessing India’s consumption outlook, infrastructure spending and corporate investment prospects while evaluating the country’s long-term growth potential.
The latest inflows have helped reinforce confidence in Indian equities even as the market remains sensitive to developments in global financial markets.
Geopolitical risks remain a concern
The renewed foreign buying comes against a backdrop of heightened international uncertainty.
Indian shares began Monday’s session with limited gains as investors monitored potential US sanctions on Iran and their possible impact on crude oil prices. Brent crude was trading around USD 93 a barrel, raising concerns about inflation and India’s import costs.
The rupee has remained relatively supported by strong capital inflows and measures by the Reserve Bank of India to manage volatility. However, month-end corporate payments and elevated energy prices could create pressure on the currency.
Market participants are expected to closely track global interest-rate signals and geopolitical developments as foreign investors reassess their exposure to Indian assets in the weeks ahead.