Mumbai: Inflow of foreign portfolio investments (FPI) surged in August with around $6 billion, or around Rs 47,000 crore, of net investments by overseas investors with a majority meant for primary issuances of shares. Around 63 per cent of net FPI flows last month were into primary issuances, according to a report by ICICI Securities.
Interestingly, last month, India outperformed other emerging markets in terms of inflows. The report also said that domestic institutional investments (DII) too had positive flows towards primary issuances, although the secondary flows continued to be negative with an outflow of $1.5 billion. “FPIs deployed a relatively high $6 billion in August 20 into Indian stocks but the higher proportion of the flows went into absorbing primary issues,” the report said.
As per the report, FPIs were buyers across sectors, except for selling in consumer staples and telecom. The top bought sectors were banks (Rs 9,200 crore), consumer discretionary (Rs 2,100 crore), and auto (Rs 1,300 crore) and pharma (Rs 1,300 crore). Jyoti Roy, DVP-Equity Strategist, Angel Broking Ltd, said that Indian equities closed in the green for the third month in a row in August with the benchmark Nifty up by 2.8 per cent. The rally in August was driven by FII flows which stood at Rs 47,080 crore which is the highest during the calendar year, Roy added.
According to Roy, positive global cues, US Fed-induced liquidity, weak dollar index, better than expected Q1 FY2021 numbers, along with continued improvement in underlying economic conditions both globally and India, led to such large inflows in the month of August. Amit Jain, Co-founder and CEO of Ashika Wealth Advisors, said: "The inflow had come on hope that by December, we may have vaccine for the coronavirus & market is already started discounting earning of the financial year 2021-22 in hope of early economic revival." Further, mutual fund flows into mid-cap stocks improved further in August 2020 while outflows were largely seen from large-caps and marginal selling in small-caps.