FPI’s stance changed in November, and so far invested ₹1433 crore in shares
Business Desk: After continuous selling in the last two and a half months, foreign portfolio investors (FPIs) have bought Indian equities worth Rs 1,433 crore so far in November. The main reason for this is the fall in US bond yields and softening of crude oil prices. FPIs were net sellers till November 15 but according to depository data, they reversed the selling trend by investing in the Indian equity market on November 16-17.
Himanshu Srivastava, co-director and research manager, Morningstar Investment Advisors India, said, “The ongoing festive season in India is being seen as a factor for the renewed interest of FPIs in the Indian market. This coupled with falling US bond yields and “Falling crude oil prices have also eased some of the pressure, which has boosted the market.” VK Vijayakumar, chief investment strategist, of Geojit Financial Services, said the market’s wariness and strong rally at the right time have forced FPIs to rethink their strategy. That is why after continuous selling in the first two weeks of November, they became buyers on the 15th and 16th of this month.
Market experts believe that the US Federal Reserve has completed raising rates and will start gradually cutting rates in 2024. If US inflation continues its downward trend, the Federal Reserve may cut rates by the middle of next year. This can facilitate FPI flows into emerging markets like India. Data shows that FPIs sold Indian equities worth Rs 24,548 crore in October and Rs 14,767 crore worth in September. Before this, FPIs had remained buyers for six consecutive months from March to August. During that period, foreign investors had invested Rs 1.74 lakh crore. However, FPIs started selling in September.
Uncertainty regarding US interest rates, rise in bond yields, high crude oil prices, and increasing geopolitical tension due to the Israel-Hamas conflict played an important role in this. So far this year, the total investment of FPIs in the domestic equity market has exceeded Rs 97,405 crore and in the debt market has exceeded Rs 47,800 crore. Vijayakumar believes that FPIs would like to invest more in sectors related to automobiles, capital products, telecom, pharmaceuticals, information technology, and construction in the near term.