Harsh Jain, co-founder and COO at Groww, said that India's biggest companies have posted better than expected results despite lockdowns and the rising number of COVID-19 cases and FPIs' investment preferences have also evolved accordingly. "The popularity of bluechip stocks has increased while small and mid-cap stocks are losing favour," he added.
The corporate fundamentals have been improving over the quarter and making many bluechip companies attractive for FPI investors.
In addition, the continuous increase in liquidity due to printing of money in western economies is supporting the rise of all equity markets across the globe, Jain said.
According to Himanshu Srivastava, associate director - manager research, Morningstar India, "A mix of domestic and global factors led to this huge net inflow."
Risk appetite among foreign investors apparently enhanced after a slew of encouraging economic data from the US, Europe and China raised hopes that there could be a chance of a quicker rebound in the global economy from the COVID-19 pandemic, Srivastava noted.
On the domestic front, there have been few major block deals in the market where either the management or promoters led shareholders sold their stakes. FPIs bought into these deals, especially in that of Bandhan Bank, where the promoter sold his stake, he added.
"The sustainability of net inflows by FPIs in Indian equities is hard to ascertain at the moment as there are several concerns looming large. Surge in coronavirus cases globally, increasing tension between the US and China and limping of Indian economy may act as a deterrent for foreign investors," Srivastava said.
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