FPIs cite South Korea, Taiwan volatility, pump ₹20,199 crore into equities in July

Foreign Portfolio Investors (FPIs) reversed their selling streak in July, turning net buyers of Indian equities with cumulative purchases worth ₹20,199 crore. Of this, ₹6,731 crore came through stock exchanges, while ₹13,467 crore flowed in via the "primary market and others" category.

Debt inflows also rose sharply, with ₹29,211 crore entering through the "General Limit" category alone, according to data from the Securities Depository Limited (NSDL).

Dr VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, attributed the shift to volatility in markets such as South Korea and Taiwan.

"The excessive volatility in markets like South Korea and Taiwan and the concentration risk in the ‘chip trade’ are prompting the FPIs to look for stabler markets like India. The stability in rupee and fair valuations of India’s large-cap stocks are other factors that are facilitating the renewed FPI inflows into India," he said.

A stable rupee and reasonable valuations in India's large-cap segment are also aiding the renewed inflows, he added.

A notable trend, according to Vijayakumar, is FPIs increasing their allocation to Indian mid-cap and small-cap stocks, driven largely by the higher growth potential these segments offer compared to large-caps.