REITs make biggest buy of ₹44,481cr on stock market in less than 3 weeks of August

In less than three weeks of August, foreign portfolio investors (REITs) made their biggest investment of the year. REITs showed strong appetite for the equity market as inflows approached 44,500 crores so far this month. Although the debt market has also seen some traction from foreign investors, it is still fractional compared to equities. After being net sellers in the first six months of 2022, REITs turned net buyers in July and momentum picked up sharply in August on the back of a robust rally in trading.

Data on NSDL showed that REITs were buying shares to the tune of 44,481 crores between August 1 and August 19. This is the highest purchase so far of the current year. Admissions amounted to 4,989 crores in the month of July.

Meanwhile, from August 1-19, REITs only invested 1,674 crore in the debt market, while the inflow is at 1,255 crore in debt-VRR instrument. REITs have shown buying interest after being net sellers for the first seven months of 2022 here.

Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said: “REITs became net buyers in the Indian market in July and the buying momentum accelerated in August with steady buying via scholarships.

He added: “The main trigger for the sustained buying has been the steady fall in the dollar index from over 109 at the end of July to around 105 recently. But on the 19th the dollar index has rose again and crossed 107. If this trend continues capital inflows could be affected. REITs were also buyers in the debt market with a net purchase of one digit 2104 cr until August 19.”

From January to June of this year, REITs made a huge 2,17,358 crore from the stock market. June was the best-selling month of the year with the release of 50,203 crores in this market.

However, due to buying in July and August, some equity outflows were clawed back. Today, overall, FDI outflows in the equity market are around 1,67,888 crore year-to-date.

However, the sale of REITs in the debt market is still lower than that of equities. Overall, the outflow of debt securities is around 15,252 crore since the start of the year, on the other hand, they were debt-VRR buyers with an influx of 3,554 crores.

Overall, REITs removed approximately 1,79,452 crores from the Indian market (including equity, debt, debt-VRR and hybrid) since the beginning of the year.

Going forward, Vijayakumar said: “The short-term trend in capital flows will be influenced primarily by the movement of the dollar. In emerging markets, India is expected to outperform with the best GDP growth this year and next. Thus, India is likely to attract more capital inflows relative to other emerging markets, however high valuations in India are a concern.

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