FPIs inflow in equity markets rise to near ₹19k cr in less than 2 weeks of Nov. Will the trend continue?

According to NSDL data, FPIs pump 18,979 crore in Indian equities from November 1 to 11, while they were sellers in the debt and hybrid markets. 2,784 crores and 90 crore respectively. FPIs shopped sequentially in debt-VRR 65 crore so far in November

Due to stellar buying in equities, overall buying by FPIs in the Indian market is around 16,169 crore in the current month till November 11.

Manoj Purohit, Partner and Leader – Financial Services Tax, BDO India said, “November brought joy to the Indian capital market segment as it saw positive net inflows by the FPI community. They became net buyers after a long wait since August 2022.”

Purohit added, “On the macroeconomic front, US Fed rate hikes, volatility in crude oil prices, volatility in US bond yields and the dollar index have played a major role in boosting investment sentiment. On the domestic front, the central bank’s continued efforts have boosted investment. Keeping inflationary trends in check, strong tax collections , bringing the domestic consumption story back to pre-pandemic levels has enabled India to stand on a better footing than other emerging markets.”

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Last month, FPIs were net sellers with outflows 8 crores in equity. Notably, October is the lowest monthly outflow of the current year.

Chief Investment Strategist of Geojit Financial Services Dr. VK Vijayakumar said, “FPI investments were almost flat in October with a small number of sales. 8 crores. FPIs were sellers in the first half of the month but turned into buyers in the second half ending with a flat net figure. There was a big change in FPI activity in November. According to NSDL data, FPIs bought equity value 18979 crore in November. In fact, they were buyers on all trading days of the month until the 11th.”

Meanwhile, StockEdge data, which tracks the daily performance of FIIs and DIIs on BSE and NSE, revealed an infusion around FIIs. 12,489.74 crore in Indian stocks so far in November. DIIs, on the other hand, are dragged around 5,644.87 crore from equity.

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At the end of November 11, the rupee lost 81 points against the US dollar. The local unit posted its best weekly performance in four years on the back of a fall in the US dollar as better-than-expected inflation data raised investors’ hopes for a less hawkish stance by the US Federal Reserve going forward. The rupee closed at 80.7950 against the US dollar on Friday.

Also, on Friday, the Sensex closed up 1,181.34 points or 1.95% at 61,795.04. The Nifty 50 ended up 321.50 points or 1.78% at 18,349.70. IT stocks outperformed their counterparts, while substantial gains were added by banking, metals, capital goods, and consumer durable stocks.

So far in November, the Sensex and Nifty 50 have climbed around 2%.

Will the buying trend by FPIs continue in the Indian market?

Vijayakumar said there has been a clear change in outlook as FPIs bought even as the dollar and US bond yields rose. Now the situation has become more favorable. The dollar and US bond yields are falling as inflation in the US continues to moderate.

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“This means FPIs are likely to buy more in the coming days,” he added. Moreover, he said, “India has the best earnings growth outlook among major economies. However, valuations are rising.”

According to Purohit, recently, Singapore has become the second largest investor in India in terms of FPI investment, behind Mauritius. America remains at the top. Another key reason why India is considered a preferred destination for equity investments is to divert some of the larger investments from China, which is currently reeling from economic and political uncertainty.

Purohit added, “The volume of foreign fund inflows indicates that India is likely to retain its top position as a preferred destination in the coming months as well.”

Disclaimer: The views and recommendations given above are those of individual analysts or broking companies and not of Mint.

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