FPI buying returns to India but remains selective, data shows

Foreign portfolio investors (FPIs) invested over Rs 25,000 crore in Indian equities between 1 and 24 August, the strongest monthly inflow since September 2024, after Rs 20,200 crore in July. If the trend holds, India could see two consecutive months of FPI buying for the first time this year, reversing a record Rs 1.2 trillion outflow in March. Livemint reports that financial services, automobiles, and consumer services drew the most money, while telecom, capital goods, and power saw outflows.

Despite the inflows, global fund managers remain cautious. Bank of America's August survey showed 32% of respondents net underweight on Indian stocks, replacing Indonesia as Asia's least-preferred market. WhiteOak Capital CIO Ramesh Mantri told Business Standard that sustained FII selling has hurt largecaps disproportionately and that India needs stronger earnings growth to attract capital back. He added that pharma, healthcare, BFSI, and consumer sectors have strong fundamentals.

Livemint notes that the Nifty 50 trades at 21.8 times earnings, below its five-year average, making some sectors attractive after corrections. However, Mantri flagged risks from energy prices, US tariffs, and the West Asia crisis, which could affect India through energy costs, business in the region, and remittances.