Budget 2024: FPI flows may remain volatile in the near-term; to catch pace post the event and Q1 results

Stock Market Today: With the Sensex and Nifty trading near all time highs being supported by strong buying by domestic funds, Foreign Portfolio Inventors turning buyers is further supporting the markets.

The Foreign portfolio Investors that were net sellers of ₹25586 crore worth of equities in May and have remain net sellers worth ₹8536 Crore in equities during the calendar year till date, however have net bought ₹14828 Crore worth of equities in June till 25th, as per NSDL data. All eyes are on sustenance of the trend.

The Lok Sabha Elections are behind us and the uncertainties associated with the new government are behind us and hence there is some amount of buying being observed by FPI's, with economic data also remaining supportive, said experts. The focus now will be shifting to corporate earnings (Q1 results) and the announcements to be made in the Union Budget said Gurpreet Sidana CEO - Religare Broking. It is thereafter that when you can expect that FPI to start looking at investments into India.

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The rate cut in the US will be another trigger for FPI's to start increasing investments into the Emerging Markets. Currently one rate cut is being expected by third or early fourth quarter of calendar year (October- December quarter.)

With the rate cut also likely to coincide by third quarter Gurpreet Sidana is expecting FPI flows into India catching pace by Pre-Diwali or around Diwali.

In the near term the FPI flows are likely to remain volatile feel experts. There are three primary reasons for the inflows turning positive in June as per Sunil Damania, Chief Investment Officer, MojoPMS. First, the continuity of the government assures ongoing reforms. Second, The 12 percent decline in copper prices over the past month is indicating that the Chinese economy is decelerating . Third, the FPI's have eagerly undertaken certain block deals in the markets.

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However, these FPI inflows are concentrated in a select few stocks rather than being widespread across the market or sectors. Damania believes that FPI inflows will remain constrained due to the high valuations currently commanded by the Indian equity market.

Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services also said that FPIs are selling where valuations are high and buying where valuations are reasonable.The trend is likely to continue.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions