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Overseas inflows into Indian equities rose to a three-month high of 350.98 billion rupees ($4.21 billion) in March, with telecommunication and consumer shares garnering the most interest, data from the National Securities Depository Ltd (NDSL) showed.

Foreign portfolio investors have bought 2.08 trillion rupees of shares in 12 months ending March, the second highest on record, and fuelled a 29% rise in the benchmark Nifty 50 to new all-time highs.

The Nifty 50 and BSE Sensex rose about 1.6% each last month, as data showing sustained strength in Asia's third-largest economy drove domestic and foreign buying.

"We see the continuity of flows coming in from foreign institutional investors adding to sustained domestic buying, thanks to strong earnings outlook and macroeconomic stability," said Divam Sharma, founder and fund manager of Green Portfolio, PMS (Portfolio Management Services).

Among individual sectors, telecommunication and fast-moving consumer goods (FMCG) stocks saw the most inflows in March, at 79.67 billion rupees and 62.41 billion rupees, respectively.

Telecom major Bharti Airtel surged to a record high during the month, with several analysts identifying the company among the top picks in Indian markets on a strong earnings outlook.

Despite inflows, the FMCG index was muted in March and gained 17.5% in fiscal 2024, underperforming the benchmarks.

"While FMCG has underperformed Nifty, we expect gradually improving earnings to trigger re-rating in valuations," said Devender Singhal, executive vice president and fund manager at Kotak Mahindra Asset Management Company.

Data from the last three general elections show that the consumer sector does well post-poll, Singhal added.

FPIs also bought high-weightage financials worth 34.65 billion rupees in March after selling 400 billion rupees in the first two months of 2024.

The financials index, which dropped 5% in January and February, rose about 3% last month.

($1 = 83.4260 Indian rupees)