Foreign portfolio investors (FPIs) have continued to show confidence in Indian equities, as they have pumped more than Rs 30,600 crore in June so far. This follows a nine-month high investment in May, where FPIs allocated Rs 43,838 crore in equities. The trend started with an investment of Rs 11,631 crore in April and Rs 7,936 crore in March, according to data from the depositories. Prior to this positive trend, FPIs had pulled out over Rs 34,000 crore during January and February. The investment flow may turn volatile in the future due to factors such as the US Federal Reserve’s position on interest rate hikes to control inflation. This has caused concerns among investors, especially FPIs, as the rising valuation of Indian markets could become a challenge. The Bank of England hiking interest rates by 50 basis points is also anticipated to caution FPIs, given the increasing valuation of Indian markets. However, FPIs’ confidence in Indian equities remains high due to the country’s stable macroeconomic profile and sturdy corporate earnings outlook. Hitesh Jain, Lead Institutional Equities at Yes Securities, highlighted that FPIs are pouring money into the Indian equities market primarily due to these factors. Himanshu Srivastava, Associate Director, Manager Research at Morningstar India, attributed the increased FPI investments to the US Federal Reserve’s decision to pause its rate hike cycle. This move has triggered capital flows into emerging markets like India, as FPIs expect better growth opportunities in the Indian markets. Srivastava also mentioned concerns over China’s economic recovery and uncertainties in the US and UK as additional factors that have aided flows into the Indian equities market. The recent increase in FPI flows is also partly influenced by the upcoming rebalancing of the MSCI Index, which is expected to lead to additional investments in Indian equities. Apart from equities, FPIs have also invested Rs 3,051 crore in the debt market during the period under review, attracted by the attractive yields offered by Indian debt securities. So far in 2023, foreign investors have put in over Rs 59,900 crore in Indian equities and close to Rs 4,500 crore in the debt markets.