FPI inflows pick up in March, investors inject Rs 11,800 crore in equities so far

“There are mainly three reasons for this renewed interest in India. The Indian market is showing great resilience and every dip is getting bought. FPIs have been forced to buy the same shares which they sold at higher prices, which is a losing game,” said K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

The benchmark Sensex hit a record high of 74,085.99 and closed the week at 74,119.39 on Friday. Further, US bond yields have been steadily declining. The 10-year yield has declined from above 4.3 per cent to 4.08 per cent now, halting the switch from equity to bonds.

The FPI strategy of selling equity in emerging markets to buy US bonds has stopped, he said.

The Indian economy is growing at better-than-expected rates and this will have a positive impact on corporate earnings and consequently on the stock market. FY24 GDP growth is likely to be around 7.6 per cent, far ahead of other large economies

These positive developments and the sustained flow of funds into the market – both directly and through institutions- can keep the market resilient. However, high valuations are a matter of concern. Valuations in the mid and small cap segments are excessive and unjustifiable. Correction in this segment is only a matter of time, he said.

Another factor that has boosted the markets is inflows into equity mutual fund schemes which increased by 23 per cent to Rs 26,865.78 crore on a net basis in February, with thematic funds receiving the highest flows, data released by the Association of Mutual Funds (AMFI) showed.

The contribution from the systematic investment plan (SIP) rose to an all-time high of Rs 19,186.58 crore in February 2024 as against Rs 18,838.33 crore in January.