Foreign Portfolio Investors (FPIs) have shifted their stance on Indian equities during November, making a net investment of Rs 378 crore due to the sharp decline in US treasury bond yields. This comes after FPIs sold Indian equities worth Rs 24,548 crore in October and Rs 14,767 crore in September.
Before the outflow, FPIs had been consistently buying Indian equities from March to August, bringing in Rs 1.74 lakh crore during that period. Overall, the cumulative trend for 2023 remains healthy, with FPIs pouring in Rs 96,340 crore so far this year.
Hitesh Jain, a Strategist at YES Securities India, believes that improving risk appetite in emerging markets and falling risk-free yields in the US will draw FPI flows towards India in the future.
According to the data, FPIs made a net investment of Rs 378.2 crore in Indian equities so far in November. Foreign investors were buyers on four days this month, with a significant buying of Rs 2,625 crore on one day.
The decline in US inflation has given market confidence that the Fed is done with a rate hike, leading to a sharp decline in US bond yields and causing FPIs to slow down their selling. Uncertain global factors continue to dictate the direction of foreign investments into the Indian equity markets, according to Himanshu Srivastava, Associate Director at Morningstar Investment Adviser India.
In addition to equities, the debt market attracted Rs 12,400 crore in the period under review. The inclusion of Indian G-Sec in the JP Morgan Government Bond Index Emerging Markets has spurred foreign fund participation in the Indian bond markets. Indian debt is relatively attractive compared to debt in other emerging markets and offers a higher yield compared to debt in developed markets, according to Bhuvan Rustagi, COO and Co-founder of Per Annum and Lendbox.
In terms of sectors, FPIs are likely to buy banking stocks, while a large-cap led rally is expected in the market, according to Geojit’s V K Vijayakumar. Sectors like capital goods and consumption are also expected to attract flows ahead of the national elections next year, as per YES Securities’ Jain.
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