Meanwhile, FPIs have turned net buyers in Indian equity markets for two consecutive months through August and helped domestic indices to stay buoyant.
In July, they were the net buyers with a total purchase of equities worth Rs 4,989 crore. September 2021 was the last time when foreign investors were net buyers.
So far this month – September, they have already invested Rs 1,963 crore, data from depositories showed.
The recent return of foreign investments coupled with global inflation seeming to have plateaued helped Indian equity markets to rally during the past month or so. The recent rise in stock indices helped in recovering the entire losses the investors incurred in 2022.
India’s headline retail inflation fell to 6.71 per cent in July from 7.01 per cent in June, the lowest level in five months. In the meantime, retail inflation in the US too somewhat moderated, which improved buying sentiments amongst investors.
Coming to FPIs investments in India, till early July, they were selling equities in the Indian markets for nine-to-ten months on a trot due to various macroeconomic reasons.
Tightening of monetary policy in advanced economies including rising demand for dollar-denominated commodities, and strength in the US dollar had triggered a consistent outflow of funds from Indian markets. Investors typically prefer stable markets in times of high market uncertainty.
Further, consistent depreciation of the rupee as well as depleting Indian foreign exchange reserves too had a bearing on the weak market sentiments.
For the record, FPIs have pulled out overall Rs 159,202 crore worth of equities so far in 2022, NSDL data showed.