Foreign investors pour in Rs 32,365 crore in equities in July on continued policy reforms, better-than-expected earnings season 

Foreign investors infused Rs 32,365 crore into Indian equities in July on the back of expectation of continued policy reforms and sustained economic growth and better-than-expected earnings season, data with the depositories showed. 

However, they pulled out Rs 1,027 crore from equities in the first two trading sessions of this month (August 1-2), the data showed. 

There has been a mixed trend with respect to FPI flows following the Budget announcement on increase in capital gains tax on equity investments. 

Going forward, developments in the US economy and markets will set the trend for FPI in August, V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said. 

“Weaker-than-expected employment data along with slowing economy has made it certain that the US Fed is expected to cut rates in September. The more important question here is the extent of cut. Currently, there is strong commentary getting built for maybe a 50 basis points rate cut in interest rates,” Vaibhav Porwal, Co-founder of Dezerv, said. 

Net inflow from foreign portfolio investors (FPIs) stood at Rs 32,365 crore in equities in July. This is on the back of Rs 26,565 crore inflow in June driven by political stability and the sharp rebound in markets. 

Before that, FPIs withdrew Rs 25,586 crore in May on poll jitters and over Rs 8,700 crore in April on concerns over a tweak in India's tax treaty with Mauritius and a sustained rise in US bond yields. 

The resurgence in FPI investment can be attributed to sustained economic growth, government's focus on infrastructure development, better-than- expected earnings season that has improved corporate India’s balance sheet, Himanshu Srivastava, Associate Director - Manager Research at Morningstar Investment Research India, said. 

Additionally, upward revisions in India’s GDP forecast by IMF and ADB, and a slowdown in China, also works in India’s favour, he added. 

Apart from equities, FPIs invested Rs 22,363 crore in the debt market in July. This has pushed the debt tally to Rs 94,628 crore this year so far. 

(With inputs from PTI)