Latest news with #FPIs'
Mint
14 hours ago
- Business
- Mint
FPIs struggle to shake off fears, bearish bets hit four-month high
Overseas investors have raised their sell positions on Nifty and Bank Nifty index futures to a four-month high, reflecting caution as global tariff tensions persist and earnings disappoint back home, according to analysts. Foreign portfolio investors' (FPI) net shorts on Nifty and Bank Nifty futures stood at 121,820 contracts on Tuesday, the highest since 128,390 contracts on 19 March, according to analytics firm IndiaCharts. These short positions are essentially hedges against falling markets, which reduces the value of their equity assets. The total FPI equity assets stood at ₹74.18 trillion as of 30 June against mutual funds' equity-oriented schemes' assets worth ₹32.69 trillion, according to NSDL and AMFI data. "While markets have factored in FY26 Nifty earnings per share growth at 11%, EPS growth for FY27 has been cut to 15.5% currently from almost 22% at the beginning of the year, which is behind the cautious FPI stance, as relative to earnings growth expectations our valuations are rich," said Shrikant Chouhan, EVP (head of research), Kotak Securities. Based on FY25 EPS of ₹1,013, the Nifty's current price to earnings multiple of 25 is higher than the five- and three-year average of 24.23 times and 22.46 times, respectively, according to Bloomberg data. FPIs' bearish stance is underscored by their selloff in the cash markets as well. In the calendar through 15 July, they have sold shares worth ₹1.07 trillion in the secondary market, according to data by NSDL. By comparison, domestic institutional investors (DIIs) have net purchased shares worth ₹3.74 trillion. Chouhan said fears of rising inflation in the US could drive up bond yields there, "putting the brake" on further rate cuts, which could strengthen the dollar, leading to further FPI outflows from emerging markets like India. Nifty earnings grew by a tepid 6.4% to ₹1,013 per share in FY25. The FY26 EPS has been estimated at ₹1125, an 11% growth, already discounted by the market. What is spooking FPIs is the cut in EPS growth estimate for FY27 to ₹1,300 per share now from ₹1,370 in January, which markets are beginning to discount on a likely slowdown in private capex, amid uncertainty created by the global trade war and depressed consumer spending, said Sudhir Joshi, consultant at Khambatta Securities. Meanwhile, the US Fed, which has cut its key interest rate by one percentage point to 4.25-4.5% between September and December last year, has been holding back this year on concerns of the global tariff war feeding into US consumer prices. With President Donald Trump slapping 30% tariff on the European Union, America's largest trading partner, effective 1 August, fears abound that retaliatory tariffs by the 27-country economic bloc could further increase consumer prices. Annual inflation in the US spiked by 30 basis points to 2.7% in June, showing how tariffs were beginning to impact prices from apparel and groceries to furnishings. "These increases would preclude further rate cuts and apply upward pressure on dollar and bond yields, evident in the increased hedges being taken by FPIs in Nifty and Bank Nifty futures," added Chouhan. Another reason is the outperformance of other emerging markets relative to India. While gross returns for MSCI India index stood at 6.55% in the calendar year through June, MSCI Emerging Market Index outperformed with a 15.57% gross return over the same period, according to MSCI, whose indices are used by global funds to allocate money across markets. While Nifty earnings are likely to grow in low double digits, those of other emerging markets could be of a higher order of 16-17% this year from 10% a year back, said Ashish Gupta, chief investment office (CIO) of Axis Mutual Fund. 'This makes other EMs a relatively bigger draw for FPIs," said Gupta. 'Within the EM basket, markets like Taiwan and Korea are estimated to have over 20% growth. Even in Europe, earnings growth is expected to accelerate this year to 8-14%." Indian stock markets plunged 17% from a record high of 26,277.35 on 27 September last year to a 10-month low of 21743.65 on 7 April this year. From there, the market rose to a high of 25,669.35 on 30 June, only to tumble 1.8% to 25212.05 by Wednesday (16 July) amid growing concerns over the trade war and earnings growth.
Mint
2 days ago
- Business
- Mint
Expert view: Indian stock market's valuation rich, earnings recovery key to sustaining gains, says InCred fund manager
Expert view: Aditya Sood, a fund manager at InCred Asset Management, believes that after a tepid earnings growth in FY25, the mean-reversion to 10-12 per cent would be the key, as the Indian stock market is trading at a PE multiple of 21.7 times FY26. In an interview with Mint, Sood shared his expectations on Q1FY26 earnings, sectors he is positive about, and how a potential India-US trade deal may influence FPIs' flow into India. Here are edited excerpts of the interview: At current levels, Indian equities are factoring in a lot of optimism, strong macro tailwinds, and robust domestic flows. However, sustaining gains at higher valuations requires incremental triggers. After a tepid 5 per cent earnings growth for FY25, the key would be the mean-reversion to a 10-12 per cent trajectory, considering that we are trading at a P/E multiple of 21.7 times FY26. Q1FY26 will be crucial in determining whether the optimism embedded in prices is justified. Sectors like financials, industrials, and discretionary consumption are expected to post strong earnings due to tailwinds from capex and stable credit growth. Mid- and small-cap stocks have witnessed earnings downgrades for seven straight quarters, but we believe this phase is over. Going forward, the improving earnings trajectory is expected to create a more supportive environment for these companies. If earnings growth surprises to the upside, especially in cyclicals, it can drive markets to new highs. The spread between India's 10-year bond yield (6.3 per cent) and the US 10-year yield (4.4 per cent) has narrowed to a record low of 1.9 per cent, indicating a significant drop in the risk-free rate. This coincides with India's risk premium reaching historically low levels compared to other emerging markets. Simultaneously, global capital is rotating out of the US, as seen in the 9.8 per cent decline in the dollar index, with flows moving into relatively undervalued markets like Brazil, South Korea, and parts of Europe. India remains a preferred destination for FPIs, with allocations shifting toward areas offering better valuation comfort, namely large-cap financials, PSUs, and export-driven sectors such as pharmaceuticals and manufacturing. The tariffs on India are expected to be in the 10-15 per cent range, which is favourable compared to most countries. In contrast, transhipment hubs like Vietnam and Thailand face significantly higher tariffs, positioning India as a more attractive alternative. As a trusted trade partner of the United States, India offers improved market access for American companies. Over the medium term, this could encourage increased FPI inflows into sectors like manufacturing, technology, and healthcare, particularly if supported by supply chain diversification and the ongoing 'China+1' strategy. Such a deal would also signal long-term economic stability and global integration, key factors for long-duration foreign investors. India's macro backdrop—modest core inflation, stable INR, and manageable fiscal deficit—offers room for the RBI to become more accommodative. However, with global rates still high and inflation risks (like food prices or oil) lingering, the RBI is likely to be cautious. A shallow rate-cut cycle could begin in Q4FY25 or early FY26, particularly if the Fed starts cutting. But it's more likely to be driven by liquidity tools and targeted support rather than an aggressive stance. The Fed is expected to start cutting rates by late 2025 base case is two to three rate cuts in 2025, but a delay could occur if inflation remains sticky. Prolonged higher US rates would (i) strengthen the dollar, pressuring EM currencies and gold, (ii) reduce the relative attractiveness of Indian equities due to risk-adjusted return compression, and (iii) trigger FPI outflows, especially from overvalued or illiquid segments. CRDMO: India's CRDMO (contract research, development and manufacturing) model is structurally benefiting from western supply chain diversification and drug pricing pressure. As Chinese CDMOs face geopolitical and regulatory risk, Indian firms are becoming go-to outsourcing hubs with superior ROIC profiles. Consumer discretionary: Driven by rural recovery and premiumisation trends, with the anticipated 8th Pay Commission and arrears payout acting as a potential trigger for increased spending. Power T&D: With electricity demand expected to double as per capita usage rises, this sector is a quasi-infrastructure utility play with decadal visibility. PSU banks: Attractive valuations for the large PSU banks, improving balance sheets, modest ROEs and scope for value unlocking in subsidiaries. We believe earnings growth would revert to 10-12 per cent in line with nominal GDP growth. We are in an earnings reset environment. FY25 has been marred by tepid earnings growth after four years of 25 per cent earnings growth on a low COVID base. The second half of the year would be materially better in terms of earnings growth. Our portfolio remains well-positioned to capture growth opportunities in the current environment. We continue to focus on identifying high-quality businesses with sustainable competitive advantages and scalable business models. The focus is on buying a great business with a return on invested capital (ROIC) that is greater than the weighted average cost of capital (WACC). Read all market-related news here Read more stories by Nishant Kumar Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms, not Mint. We advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
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Business Standard
06-07-2025
- Business
- Business Standard
Influx of ₹14,590 cr by foreign investors in Jun; early Jul sees withdrawal
Foreign investors put in Rs 14,590 crore in the country's equity market in June, marking the third straight month of investment, supported by improving global liquidity conditions, easing geopolitical tensions, and a rate cut by the Reserve Bank of India. However, foreign portfolio investors (FPIs) turned net sellers in July and pulled out Rs 1,421 crore in the first week of the month, data with the depositories showed. Going forward, in the near term, FPI flows are expected to remain choppy on account of tariff deadline developments and US data volatility, Vaqarjaved Khan, Senior Fundamental Analyst, Angel One, said. In addition, FPIs buying will hinge on Q1FY26 result indications. "If the results indicate earnings recovery, that will be positive. Disappointment on these factors can impact the market and, thereby, flows," V K Vijayakumar, Chief Investment Strategist, Geojit Investments, said. According to the data with the depositories, FPIs made a net investment of Rs 14,590 crore in equities in June. This positive momentum follows a net investment of Rs 19,860 crore in May and Rs 4,223 crore in April. Prior to this, FPIs had pulled out Rs 3,973 crore in March, Rs 34,574 crore in February, and a substantial Rs 78,027 crore in January. With this, FPIs' outflow stood at Rs 79,322 crore in 2025 so far. "FPIs exhibited a cautious yet improving stance in June 2025, beginning the month with notable outflows from the equity markets driven by elevated US bond yields, trade tensions, overvalued Indian stocks and deteriorating geopolitical environment," Himanshu Srivastava, Associate Director, Manager Research, Morningstar Investment, said. However, sentiment shifted towards the later part of the month as global liquidity conditions improved, geopolitical tensions eased, the RBI cut rates, the rupee strengthened, and oil prices stabilised, he added. In the second half of June, FPIs were buyers in financials, autos and auto components, and oil and gas sectors, while they turned sellers in capital goods and power. On the other hand, FPIs pulled out Rs 6,121 crore from the debt general limit and Rs 6,366 crore from the debt voluntary retention route during the period under review.
The Hindu
06-07-2025
- Business
- The Hindu
FPIs invest ₹14,590 crore in June; early July sees withdrawal
Foreign investors put in ₹14,590 crore in the country's equity market in June, marking the third straight month of investment, supported by improving global liquidity conditions, easing geopolitical tensions, and a rate cut by the Reserve Bank of India. However, foreign portfolio investors (FPIs) turned net sellers in July and pulled out ₹1,421 crore in the first week of the month, data with the depositories showed. Going forward, in the near term, FPI flows are expected to remain choppy on account of tariff deadline developments and U.S. data volatility, Vaqarjaved Khan, Senior Fundamental Analyst, Angel One, said. In addition, FPIs buying will hinge on Q1FY26 result indications. "If the results indicate earnings recovery, that will be positive. Disappointment on these factors can impact the market and, thereby, flows," V.K. Vijayakumar, Chief Investment Strategist, Geojit Investments, said. According to the data with the depositories, FPIs made a net investment of ₹14,590 crore in equities in June. This positive momentum follows a net investment of ₹19,860 crore in May and₹4,223 crore in April. Prior to this, FPIs had pulled out ₹3,973 crore in March, ₹34,574 crore in February, and a substantial ₹78,027 crore in January. With this, FPIs' outflow stood at ₹79,322 crore in 2025 so far. "FPIs exhibited a cautious yet improving stance in June 2025, beginning the month with notable outflows from the equity markets driven by elevated US bond yields, trade tensions, overvalued Indian stocks and deteriorating geopolitical environment," Himanshu Srivastava, Associate Director, Manager Research, Morningstar Investment, said. However, sentiment shifted towards the later part of the month as global liquidity conditions improved, geopolitical tensions eased, the RBI cut rates, the rupee strengthened, and oil prices stabilised, he added. In the second half of June, FPIs were buyers in financials, autos and auto components, and oil and gas sectors, while they turned sellers in capital goods and power. On the other hand, FPIs pulled out ₹6,121 crore from the debt general limit and ₹6,366 crore from the debt voluntary retention route during the period under review.
Mint
27-05-2025
- Business
- Mint
Bull vs bear: Can bulls continue to rule Indian stock market despite FPI selling? These 5 factors might come to rescue
It appears that foreign portfolio investors (FPIs), who were aggressively buying Indian equities in April and early May in the cash segment, are now turning cautious and potentially selling at higher levels. FPIs' buying of Indian equities stood at a meagre ₹ 135.98 crore on May 26, even as the Nifty 50 closed with a healthy gain of 0.60 per cent. They are still net buyers of Indian equities worth nearly ₹ 12,328 crore in the cash segment this month. However, the trend over the last several sessions indicates that the momentum is losing steam. The Indian stock market's stretched valuation and mixed Q4 results could be the key factors behind FPI selling at higher levels. However, the dollar's weakness seems to have capped the foreign capital outflow. As the Indian stock market navigates a plethora of uncertainties related to US President Donald Trump's tariff policies, the interest rate trajectory of the US Federal Reserve, and global economic growth, it seems difficult to predict whether FPIs will continue pouring money into the Indian stock market in the short term. Will the Indian stock market suffer a deep crash in case of an FPI selling? While FPI selling could weigh on Indian stock market sentiment, it is unlikely that the domestic market will see a deep crash. This is because of the bright growth outlook of the Indian economy. Five key factors that may keep the Indian stock market resilient in FY26 amid FPI selloff The monsoon is expected to remain above normal this season. Monsoon winds hit the Kerala coast on May 24, eight days before the normal date of 1 June. A healthy monsoon is not only positive for the agriculture sector, which contributes about 18 per cent to India's economy, it also augurs well for allied sectors, such as rural consumption, FMCG and automobiles. The Reserve Bank of India (RBI) announced on Friday, May 23, that it will pay ₹ 2.69 lakh crore as a dividend to the central government for FY25. This is the highest-ever surplus that the central bank will pay to the government. RBI's dividend will help the government maintain its fiscal deficit, which will build momentum for economic growth, strengthen the currency, and possibly fetch ratings upgrades and more foreign investments. All this will augur well for the stock market. "RBI's bumper dividend payment to the government, exceeding the budget estimates, will help contain the fiscal deficit target for FY26 at 4.4 per cent. This, in turn, can sustain the low inflation and declining interest rate trend, which will continue to support the equity market," said VK Vijayakumar, Chief Investment Strategist, Geojit Investments. Experts say the benefits of income tax relief announced in the Budget 2025 will be visible after the second half of this fiscal year. The increase in disposable income could mean more spending on goods and services. Increased consumption and demand could give a significant boost to the Indian economy and underpin stock market sentiment. India's retail inflation touched a six-year low of 3.16 per cent in April, marking a third consecutive month of sub-4 per cent print. Retail inflation is expected to remain at comfortable levels amid easing geopolitical concerns and a healthy monsoon. On the other hand, the Indian economy is expected to keep growing at a healthy pace. Despite global chaos, the Indian economy may grow slightly above 6 per cent in FY26. Morgan Stanley upgraded its forecast for the Indian economy to 6.2 per cent year-on-year for FY26, up from 6.1 per cent and 6.5 per cent for FY27, up from 6.3 per cent. Meanwhile, NITI Aayog Chief Executive Officer (CEO) BVR Subrahmanyam said India has overtaken Japan to become the world's fourth-largest economy. He further said that in another two to three years, India may surpass Germany and become the third-largest economy in the world. As of May 26, the total number of investors registered with the BSE stood at nearly 21.68 crore, up about 25 per cent year-on-year. A strong influx of retail investors has been a key reason that has helped the domestic market avoid any major crash during periods of heavy foreign capital outflow. "New retail investors continue to pour into the domestic markets. Last week also over six lakh new investors entered the capital markets for the first time. Thus, we firmly believe that the outlook for the Indian equity markets remains optimistic," said G Chokkalingam, Founder & Head of Research, Equinomics Research Private Limited. Read all market-related news here Read more stories by Nishant Kumar Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions, as market conditions can change rapidly, and circumstances may vary.
