FPI inflows into India witnessed a robust performance, reaching $2.4 billion in August 2023, according to the Reserve Bank of India’s (RBI’s) monthly ‘State Of The Economy’ report. This marked the sixth consecutive month of FPIs remaining net buyers in the Indian market.
Among emerging market peers, India attracted the highest equity inflow, while several other countries faced capital outflows due to global uncertainty and a flight to safety.
Key sectors attracting substantial FPI investments in the period August 16-30, 2023 included power, capital goods, information technology, and consumer services. Incidentally, global equity indices declined in August and early September amid expectations of a prolonged period of higher policy rates, the report said.
Domestic Equity Market Outlook Of RBI
Domestic equity markets experienced a decline in the latter part of August 2023 due to concerns over global interest rates. However, they subsequently rebounded in early September following positive gross domestic product (GDP) data from Q1 2023-24, and robust manufacturing and services’ purchasing managers’ index (PMI).
Equities gained further with the moderation in headline inflation in August 2023. A surge in industrial output also boosted investor sentiments, the report added.
Overall, the BSE Sensex increased by 3.7 per cent since August 14, 2023 to close at an all-time high of 67,839 on September 15, 2023. Further, when compared to the cash market, the derivatives segment of the equity market showed a more pronounced growth, RBI said in its report.
August also saw a renewed surge in fresh demat account openings, with over 18 million additions, taking the total number of demat accounts in India to 127 million.
Investments through systematic investment plans (SIPs) crossed Rs 15,000 crore for the first time in July 2023 and rose further to Rs 15,814 crore in August.
“The resilience of SIP investments over the last few years amid volatile market conditions highlights the rising financialisation of savings and maturity of retail investors,” RBI said.
Investors also increasingly invested directly in government securities through the RBI Retail Direct platform because of the attractive interest rates, the report further said.
