Foreign institutional net investments turned positive in March, thanks to GQG Partners’ investment in Adani Group companies. For the third month in a row, foreign institutional investors have been selling stocks. FII flows in 2023 have been erratic, while DIIs have invested more than $10 billion.
GQG Partners acquired stakes in four group companies on March 2 for Rs 15,446 crore. Following this, Adani Group’s combined market capitalization increased by 81,980 crores the next day, fueling investor sentiment and restoring some investor confidence.
Gautam Adani sold shares in four companies: Adani Enterprises, Adani Ports & Special Economic Zone, Adani Transmission, and Adani Green Energy.
The irony is that the Adani stock crisis was also one of the major causes of volatility in the domestic market a few weeks ago, due to Hindenburg Research‘s fraud allegations and other regulatory aspects related to stock markets.
However, the market correction is making them more appealing, which may entice more investors in the future, according to experts. “The near-term outlook for FPI is much brighter now.” Despite the fact that Indian valuations remain relatively high, the recent market correction has made valuations more reasonable than previously,” said Dr. V K Vijayakumar, chief investment strategist at Geojit Financial Services.
“FPIs becoming buyers in banking will help banking stocks scale higher levels, aided by good Q4 results,” Vijayakumar said. Nifty Bank has gained more than 3% in the last week, following a massive sell-off in these stocks this year.
An improved year for FIIs
Sanjeev Hota, vice president and head of research at Sharekhan BNP Paribas, expects India to see net FII inflows this year after experiencing significant outflows last year. Globally, macroeconomic headwinds are fading, but it’s too early to tell if volatility will end, he believes.
“At 17.5x one-year forward valuation, it appears prudent to put new money into the markets.” Furthermore, following the recent correction, this is an excellent time for long-term investors to invest. Long term, India’s growth story appears solid, and it presents an opportunity for investors to accumulate quality stocks at reasonable prices,” Hota said.
Because of rising interest rates in the US market, FII exits have been making headlines for several months.
The rise in US interest rates does not bode well for Indian markets because it may cause foreign investors to withdraw their money from emerging markets like India and invest it in US treasuries and money markets, which appear more appealing.
While FIIs were selling Indian stocks, domestic institutional investors (DIIs) such as mutual funds and insurance companies purchased more Indian stocks during the volatility.
