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FPIs have been net buyers of equity. Is there a change in investor sentiment?

Although the investor sentiment has definitely changed, domestic investors have been keeping their faith for long, says Dhirendra Kumar

Breaking their two-month selling streak, FPIs seem to have been buying in the Indian equity markets. Do you think there is a change in the sentiments? What's your opinion on this?
- Anonymous

We witnessed massive sell-offs when the pandemic started, as foreign investors were pulling out money. Having said that, I don't feel we have to take any lessons from this because domestic investors have kept their faith, with the April AMFI numbers bearing testimony to that. When it comes to SIP flows, the inflows fell from about Rs 8600 crore in March to Rs 8300 crore in April - a drop of about Rs 300 crore. Although the investor sentiment has definitely changed, domestic investors have been keeping their faith.

The sudden sell-off by foreign investors in March definitely impacted the markets in terms of a heavy fall in the markets. But thereafter, our markets have been recovering steadily. In my opinion, this recovery is primarily due to the inflows to the equity markets and not because of any new information regarding the company's earnings, etc. However, the steady recovery shouldn't be considered as any consolation to investors because the markets run on the company's earning situation, which is still uncertain. The future will tell us how long this scenario will linger - in other words, which companies will be permanently impacted and which won't.

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