Defence Stocks Capture Investor Attention as FIIs Stay Bullish

Mumbai, 8th May – Foreign Institutional Investors (FIIs) continued their strong buying spree in Indian equities, marking the fifteenth consecutive day of net inflows. On May 7, FIIs invested Rs 2,586 crore, keeping investor optimism high despite geopolitical events, including the announcement of Operation Sindoor. This steady inflow reflects confidence in India’s market growth potential, with foreign investors seeking stability amid global uncertainties.

This sustained interest from FIIs highlights India’s appeal as a key growth destination. The market remains a safe haven due to strong economic fundamentals, ongoing reforms, and an expanding consumer base. Despite global challenges, foreign investors are maintaining a positive outlook on India’s long-term prospects.

Domestic Institutional Investors (DIIs) also contributed significantly, with net purchases of Rs 2,378 crore on the same day. This synchronized buying action between FIIs and DIIs reflects a broad-based optimism, indicating that both domestic and international investors are aligned in their confidence in India’s economic resilience.

Key Highlights:

• FII Net Inflow: FIIs continued their buying streak with a net inflow of Rs 2,586 crore on May 7, marking the 15th consecutive day of inflows.
• Defence Stocks Performance: Defence stocks like Bharat Electronics (BEL), Hindustan Aeronautics Ltd. (HAL), and Paras Defence picked up pace, fueled by hopes of a rise in defense expenditure. Even so, the overall market stayed flat, with no meaningful short-term response to Operation Sindoor.\
• Market Movement: Benchmark indices remained flat, but mid and small-cap stocks were strong, recovering from a phase of underperformance. Auto, consumer durables, and real estate sectors witnessed positive movement, whereas FMCG, healthcare, and pharma witnessed downward pressure.
• Indian Rupee: The rupee fell by 40 paise, closing at 84.83 against the US dollar, continuing its downward trend.

Though Operation Sindoor drew attention, its market impact was limited. Defence stocks surged due to expectations of higher defense budgets, while auto stocks benefitted from positive trade developments, particularly with the UK. The real estate sector also showed strength, boosted by improving sentiment.

Bottomline:

FIIs have remained committed to Indian equities, with inflows supporting market sentiment, particularly in the defence and automotive sectors. Despite global uncertainty, the resilience of the Indian stock market continues to draw domestic and foreign investors. The India equity market’s outlook remains optimistic, underpinned by robust economic fundamentals and investor confidence.