FPIs turn positive with net inflow of ₹9,000 crore in Indian equities during November
The foreign portfolio investors (FPI) have turned net buyers in the Indian stock market in November after three consecutive months of abated selling. The decline in the US treasury yields and softening of dollar amid rising bets that the US Federal Reserve is done with interest rate hike have acted as key catalysts for the foreign fund inflows into emerging markets like India.
The FPI inflows into Indian equities during the month of November stood at ₹9,001 crore as against selling of over ₹39,000 crore in September and October together, according to National Securities Depository Ltd (NSDL) data. Taking into account debt, hybrid, debt-VRR, and equities, FPI inflows were at ₹24,546 crore during the month.
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Meanwhile, on December 1, FPI inflows in Indian equities stood at ₹9,744 crore, as per NSDL data.
“FPIs have reversed their selling strategy in India. Decline in US bond yields and the resilience of the Indian market have forced the FPIs to halt their selling. During the last six days, FPIs were consistent buyers in India. In November, as per NSDL data, FPI inflows turned positive with a net buy figure of ₹9,000 crore even though they sold in the cash market for ₹368 crores. The total buy figure for 2023, so far, now stands at ₹1,04,972 crore,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Market at record high
The Indian stock market indices witnessed strong gains last week, with the benchmark Nifty 50 hitting a new record on Friday and the Sensex coming within kissing distance of its all-time high.
India’s stellar GDP growth in the second quarter and positive cues from state exit polls lifted market sentiment. India’s Q2 GDP grew 7.6%, significantly exceeding the expectations.
Both the benchmarks, Nifty 50 and Sensex posted their best month in 2023 in November, supported by the return of FPI inflows.
On Friday, the Sensex ended 492.75 points, or 0.74%, higher at 67,481.19, while the Nifty 50 rose 134.75 points, or 0.67%, to settle at 20,267.90.
What lies ahead for market?
Going forward, FPI response will be crucially determined by the market trend, which, in turn, will be influenced by the state election results.
“If the state election results turn out to be favourable for the ruling dispensation, the market will stage a rally. FPIs are unlikely to miss that rally by big selling. They might buy into financials where the valuations are fair,” said Vijayakumar.
However, he believes since overall market valuations have reached high levels, FPIs may turn sellers at higher market levels.
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