FPIs were consistent buyers as the Union Budget 2024-2025 focused on fostering a stable and mature equity investment environment.
Market experts, citing the data by National Securities Depository Limited (NSDL), said that FPIs have invested Rs 33,688 crore in equity and Rs 19,222 crore in debt so far this month (July 26).
For the full year-to-date, FPI investment in equity stands at Rs 36,888 crore and Rs 87,846 crore in debt in the country.
Analysts said this massive flow of money into the domestic mutual funds and the newfound clout of the retail investors have “strengthened the domestic investors over their foreign counterparts”.According to them, the reason for a quick rebound in the capital markets can be attributed to positive sentiments and a stable government’s assurance of continuity of reforms.Meanwhile, the Budget emphasises capital allocation and policy measures to boost the majority of sectors which will help to continue the long-term growth of the economy.Experts said the government has also made a comprehensive review of the indirect Tax rate structure for ease of trade, removal of duty inversion and reduction of disputes.
The budget proposes an increase in short-term capital gains (STCG) tax from 15 per cent to 20 per cent and long-term capital gains (LTCG) tax from 10 per cent to 12.5 per cent.
It may affect sentimentally for the short term but the way the long-term outlook of the equity market remains positive, it will not change Inflow to the equity market, according to Pantomath Capital Advisors.
The Indian growth story remains intact and manufacturing sentiments in the country have shown an improvement in the April-June quarter. The demand conditions continue to be strong and may get a further boost with the progress of the monsoons.
The budget allocation for infrastructure, the rural sector and the thrust on employment generation schemes are seen as big moves which will boost economic activity and boost consumption.
A survey indicated this month that the business activity accelerated to a three-month high in July as the services sector surged and manufacturing picked up momentum leading to companies hiring at the fastest pace in 18 years.
India has emerged as the fastest-growing major economy in the world, clocking a growth rate of more than 8 per cent in 2023-24.