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Below is quote on FPI By Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services

The flood of FPI flows into India continues with Rs 21943 crores of inflows (including bulk deals) till 8th of this month. If this trend continues, monthly FPI flows in July will exceed the figures in May and June, which were Rs 43838 crores and 47148 crores respectively.
This ‘U’ turn in FPI flows which were negative Rs 34626 crores in January and February (combined) this year has been the primary driver of the strong rally that we are witnessing in the market since the lows of March.
FPIs have been steadily buying in financial services, automobiles, capital goods and construction. Recently they have stepped up buying in FMCG and power. The selling trend in IT continues.

FPI strategy is focussed more on country-specific factors rather than sectoral prospects within a country. That’s why they adopted the ‘Sell India, Buy China’ strategy in Jan and February. During these 2months FPIs sold in financial services for Rs 15744 crores. Now, pursuing the ‘Sell China, Buy India’ strategy, the same FPIs have bought stocks in financial services for Rs 19229 crores in June alone and this buying trend continues.
Sustained FPI buying has pushed valuations into expensive, but not yet in bubble territory

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