FIIs buy over $4 billion in stocks since June as Sensex, Nifty clock record highs- Grow Mudra

FIIs buy over $4 billion in stocks since June as Sensex, Nifty clock record highs

09 Jul , 2024 By : Debdeep Gupta

Indian markets continued to hit record highs as foreign investors bought over $1.3 billion in equities in early July, following a $3.18 billion net buy figure in June, which together offsets the selling seen in April and May.

Foreign investors were net sellers in April and May, choosing to be on the sidelines due to election-related uncertainties, but resumed buying soon after the mandate which showed BJP-led NDA returning with fewer seats and BJP not securing a majority on its own. Key portfolios remaining largely unchanged indicated Modi government appeared less susceptible to demands from allies and signaled policy continuity.

Market analysts are expecting a minimal impact on earnings and growth, citing the BJP-led NDA's pro-growth stance and the economy's resilience to a slimmer mandate for the alliance than in 2019.

The Nifty 50 crossed the 24,000 mark, and the BSE Sensex topped the 80,000 mark, reaching record highs. Despite volatility during the Lok Sabha election period, markets stayed strong and upward. The Nifty-50 saw a 25% YoY surge by Jun’24, extending its rise for five consecutive quarters (up 38% since Mar 23). The Indian listed universe's market cap exceeded $5 trillion, comprising 4.2% of the global market cap.

Analysts expect the upcoming Union Budget to set priorities for the next five years and spotlight the government's policy direction for the third term. The government is anticipated to use additional funds from the RBI dividend to support economically weaker sections and the middle class, thus boosting consumption ahead of upcoming state elections in October-November. The street is also going to be closely tracking the Q1FY25 earnings fine print.

The stable government, ongoing reforms, and macro tailwinds are expected to drive a private capex revival, benefiting industrials, cement, infrastructure, and PSU banks. Analysts added that the power, defense, and railways sectors will attract investors due to new technologies and privatization.

Real estate is favored for its growth outlook and potential rate cuts, while PSU banks remain attractive due to their discounted valuations. Small caps are seen positively for their cyclical upturn and strong earnings growth, with selective positivity towards quality mid-caps despite high valuations, they said.