Foreign portfolio investors (FPIs) have turned net buyers in Indian equity markets for two consecutive months.

Till early July, foreign portfolio investors (FPIs) had been selling equities in the Indian markets for the past nine-to-ten months due to various reasons. Tightening of monetary policy in advanced economies including rising demand for dollar-denominated commodities, and strength in the US dollar had triggered a consistent outflow of funds from Indian markets. Investors typically prefer stable markets in times of high market uncertainty.

Further, consistent depreciation of the rupee as well as depleting Indian foreign exchange reserves too had a bearing on the weak market sentiments.

India’s forex reserves have been depleting for months now on account of RBI’s likely intervention in the market to defend the depreciating rupee coupled with strong demand for dollars in order to settle import trade. So far in August, they bought equities worth another Rs 51,204 crore, data showed. For the record, FPIs have pulled out overall Rs 168,798 crore so far in 2022, NSDL data showed.