New Delhi, June 21: Increased global stability may lead to a recovery of the Indian rupee against the dollar, potentially encouraging foreign investors to return to Indian markets, which have recently seen a trend of net selling. This insight was shared by analysts on Sunday.
The Nifty 500 is expected to see a robust 15.6% growth in earnings for the fiscal year 2026, providing fundamental support and strength to the market.
Analysts further noted that the poor monsoon this year remains a concern.
Since June 15, there has been a noticeable shift in the activities of foreign portfolio investors (FPI). During the week ending June 19, FPIs bought equities in three sessions while selling in only two.
Dr. V.K. Vijaykumar, Chief Investment Strategist at Geojit Investments Limited, stated, “In the week ending June 19, FPIs made a net purchase of ₹3,386 crores in the cash market. This suggests that the prolonged selling phase by FPIs in India may be coming to an end. The main reason for this shift in FPI activity is the stability and gradual appreciation of the rupee.”
The Indian rupee has recovered well from its low of 96.96 against the dollar (observed on May 20) to close at 94.34 on June 19.
Analysts predict significant dollar inflows through FCNR(B) bonds in fiscal year 2027. Additionally, a decline in Brent crude prices (down to $80) is expected to help India fund its current account deficit without any pressure in the same fiscal year.
However, concentration risk from investing in a limited number of stocks in South Korea and Taiwan is causing some concern for FPIs.
Despite this, stocks related to artificial intelligence and companies like Samsung, SK Hynix, and TSMC remain attractive due to the potential for substantial profits.
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