Foreign investors remained net buyers for the second straight month in the Indian markets. In April foreign institutional investors (FII) bought shares worth a net Rs 5711.8 crore while domestic investors (DII) purchased equities worth a net Rs 2,216.57 crore. In March, the FPIs had bought equities worth a net Rs 1,997.7 crore. Analysts attribute the shift in FPI’s approach to the appreciation of the rupee against the US dollar and the bullish trend in both Nifty and Bank Nifty. India’s Current Account Deficit (CAD) is declining and if this trend continues the rupee may appreciate further, according to experts. FPIs have been investing in financial services and auto stocks.
Why FIIs remained net buyers in April 2023?
“An important macro factor that has tilted the FPI approach is the appreciation in the rupee. Rupee which had touched a low of 82.94 to the dollar in late February this year has now appreciated to 81.75 to the dollar. India’s Current Account Deficit is declining and if this trend continues the rupee may appreciate further. FPIs are likely to bring more inflows into India in this context,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Investors advised to stay cautious as correction looks imminent
“FPI inflows for the April month have been excellent and the highest since the past 6 months which has also been reflected in a generally bullish trend in both Nifty & Nifty Bank. The Nifty Bank has mainly contributed to the Nifty outperformance this month but investors should be cautious at current levels as a price correction looks imminent considering current overbought levels. Investors should book profits and wait for a dip to buy at better levels in May,” said A R Ramachandran of Tips2trades.
In April, the NSE Nifty 50 jumped over 4%, Bank Nifty surged 6.5%, Nifty Financial Services soared 6.1% and Nifty Auto skyrocketed 7.7%. The Nifty closed April’s last session broadly higher, rising 150 points or 0.85% to 18,065 and the Bank Nifty jumped 233.05 points or 0.54% to 43,233.9.