At a time when most of the emerging markets witnessed fund outflows by Foreign portfolio investors (FPI), India received positive flows for the second straight month amid hopes of a coronavirus vaccine. The FPIs remained net buyers for the second consecutive month in July with net investment of Rs 3,301 crore in Indian markets. In the month of June, FPIs had pumped in Rs 24,053 crore in Indian markets.
As per the depositories data, FPIs invested Rs 7,563 crore in equities, while withdrawn Rs 4,262 crore during the last month. As a result, net investment stood at Rs 3,301 crore.
The investment in July was lower than that in June as FPIs maintained a "cautious stance" while investing in India as coronavirus cases continued to surge even as many states implemented fresh lockdown measure thus fanning concerns that growth in the domestic economy could be delayed further, said Himanshu Srivastava, associate director - manager research, Morningstar India.
Srivastava said some of the key factors that prompted investment in July include surge in markets which provided FPIs good profit booking opportunity, improvement in sentiment on the back of rising hopes of a coronavirus vaccine.
Union Health Minister Harsh Vardhan recently said that two Indian companies have reached the clinical trial phase in the run-up to the development of a COVID-19 vaccine. Bharat Biotech's coronavirus vaccine trial for the company's candidate COVAXIN has started in Odisha's Institute of Medical Sciences (IMS) and SUM Hospital. Serum Institute of India, that is producing the frontrunner Oxford University-AstraZeneca COVID vaccine, has committed to producing 1 billion doses of the vaccine.
In the last week of July, FPI flows in emerging markets were mixed with South Korea and India receiving positive flows whereas most of other markets witnessing outflows, said Rusmik Oza, executive vice president, head of fundamental research at Kotak Securities.
During the last week, Sensex fell 522.01 points or 1.36 per cent with six of the 10 most valued companies saw a combined erosion of Rs 1,38,839.83 crore in their market valuation, while Reliance Industries and HDFC Bank emerged as major losers.
With PTI inputs