IANS | 23 Jul, 2023
FPI flows into India continue unabated in July, too. India is the
largest recipient of FPI flows YTD among emerging markets, says V K
Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Till
July 21, FPIs have invested Rs 43,804 crore in India. This figure
includes investment through stock exchanges, primary market and bulk
deals.
FPIs continue to invest in financials, automobiles, capital
goods, realty and FMCG. FPI buying in these sectors have contributed
hugely to the surge in prices of stocks in these sectors and the Sensex
and Nifty scaling record highs, he said.
The concern, however, is
the rising valuations. At high valuations some negative triggers can
lead to sharp correction. This happened on Friday when the Sensex tanked
by 887 points on negative news from Infosys and HUL, he added.
The
US Dollar Index (DXY) has slipped below $100 for the first time after
April 2022. When the Dollar Index falls, the Indian Rupee appreciates
and the dollar weakens, which leads to increased fund flow from FII and
FPIs, SBI Securities said in a report.
The heavy inflow helps the market to surge higher, SBI Securities.
Last
week, the volatility index India VIX ended at 10.68, which was the
lowest closing since December 2019. This decline in volatility indicates
that there is less fear in the market and investors have adopted
risk-on mode, the report said.
Hence, overall market structure
looks very promising as the formation of higher high and higher low is
seen on the chart and there is stability in volatility.
Stability
of volatility over time is a good thing because it allows market
participants to estimate maximum potential gains and losses with greater
accuracy.
