Due to increasing valuations and increased volatility worldwide, foreign portfolio investors’ (FPIs’) inflows into equities suffered a noticeable slowdown in August, while domestic institutional investors’ (DIIs’) inflows reached their highest level in three months. In contrast to their July and June equity investments of Rs 23,486 crore and Rs 35,845 crore, respectively, DIIs made around 48,280 crore equity investments during the month.
FPI investments in August were $873 million (Rs 7,320 crore), which is a significant decrease from the prior two months due to prudence brought on by high valuations and volatility in global stocks during the first half of the year.
Moreover, a robust primary market was the reason for August’s FPI inflows. Based on data, FPIs were sellers of shares valued at $662 million (about Rs 5,551 crore) if primary market inflows were removed.
A further factor that may have worsened investor confidence in August was the volatility brought on by the unwinding of the yen carry trade and concerns about a possible US recession in the first part of the month.
August saw advances for the benchmark Nifty and Sensex of 1.1% and 0.8%, respectively, marking the third consecutive month of gains. The expectation that the US Federal Reserve would lower interest rates during this month’s policy meeting fueled gains. Even though FPI inflows have been respectable over the past few sessions, analysts predict increased volatility in flows due to the high values.
