FPIs return as buyers to buoy stock markets afresh

After days of profit-taking that led the market down in the recent past, foreign portfolio buyers (FPIs) have turned net buyers in the equity market, having bought stocks worth Rs2,750 crore since Friday last. Domestic institutional investors too have bought stocks worth Rs1,406.67 crore in the last four trading sessions, according to market data.

Even as the IMF and the RBI expect a sharp dip in India’s Gross Domestic Product (GDP) growth, foreign portfolio investors (FPI) have turned net buyers in the last four consecutive trading sessions. The last time they were net buyers for more than four days was in April.
Unlike in the past, this time, however, the market has seen a synchronised buying by foreign portfolio investors and domestic institutional investors, especially over the past two days.
Domestic institutional investors and foreign portfolio investors usually take turns to milk the market – one following the other.
Domestic investors bought equities worth Rs1,406.67 crore in the last four days, while also remaining sellers on Friday and Monday.
This has brought in an element of volatility in the market, although for a short term, according to analysts. But they do not see any big fall from current levels as market has already bottomed out with most of the negatives and positives taken stock of.
A combination of corporate profitability, the recent tax sops announced by the government to India Inc and the rate cut by the Reserve Bank and follow-up by banks have helped change the market mood, say analysts.
Global fund managers UBS, BNP Paribas say the recent measures announced by the government are supportive of improved medium-term growth and sentiment. However, sectors like autos, IT services and SMIDs continue to lag, according to fund managers.