FPIs back in the ring, invest Rs 19K crore in November

After pulling out over Rs 1.40 lakh crore from India since January this year, foreign portfolio investors (FPIs) have started investing in Indian markets. FPIs pumped in close to Rs 19,000 crore in Indian stock markets so far this month amid signs of moderating trend in the US inflation and softening of the dollar.

As a result, the Sensex gained 845 points during the week to close above the 61,000 level at 61,795.04 on Friday. According to NSDL data, FPIs invested Rs 18,979 crore in equities during November 1-11. However, investors pulled out Rs 2,784 crore from the debt market during the period under review as the rise in interest rates in the US and other developed markets prompted them to invest in their home markets. The change in the FPI investment came after a net outflow of just Rs 8 crore in October and Rs 7,624 crore in September. FPIs were net buyers in August to the tune of Rs 51,200 crore and nearly Rs 5,000 crore in July. Before that, foreign investors were net sellers in Indian equities for nine months in a row which started in October last year. According to V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, there is a major change in the FPI activity in November. “In fact, they were buyers in all trading days of the month till November 11. There is a clear change in the approach of FPIs since they bought even when the dollar and US bond yields were rising. Now the situation has changed to be more favourable.”

“Since inflation in the US is showing a moderating trend, dollar and US bond yields are declining. This means FPIs are likely to buy more in the coming days. Also, India has the best earnings growth outlook among large economies. However, valuations are getting stretched,” Vijayakumar said. If the US inflation comes down further and the Federal Reserve goes slow in hiking rates, FPI inflow is likely to rise.

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