FPIs pump ₹22,766 crore in Indian equities; Will the inflows continue in December? Experts weigh in
- FPIs invested ₹22,766 crore worth of Indian equities this month, and the net inflows stood at ₹34,318 crore as of December 13
Foreign portfolio investors (FPIs) took a sharp U-turn and turned net buyers on positive domestic indicators in December, snapping their robust two-month selling streak. D-Street experts believe the trend reversal is a clear strategy for foreign investors to bank on year-end profits in the Indian stock market.
According to the National Securities Depository Ltd (NSDL) data, FPIs invested ₹22,766 crore in Indian equities this month, and net inflows stood at ₹34,318 crore as of December 13, taking into account debt, hybrid, debt-VRR, and equities. The total debt outflow is ₹666 crore so far this month.
“FIIs turning buyers in December 2024 after relentless selling in October and November has contributed to the recovery in the market from the November lows," said Dr V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Also Read: FPIs stage a comeback in December, infuse ₹24,454 crore into Indian equities; Is the sell-off over?
FIIs bought equity for ₹14,435 crore through exchanges until December 13. The total buy figure, including the exchange buying and buying through the ‘primary market and others category’, stood at ₹22,765 crore as of December 13," added Dr. V K Vijayakumar.
FPIs snap two-month selling streak
FPIs were net sellers in Indian markets last month amid the uptrend in the US market and US bond yields, fueled by Republican Donald Trump's victory in the US presidential elections and the US Federal Reserve's interest rate cut verdict. However, the US Fed officials have clarified there is no hurry to cut rates.
FPI sell-off hit a record high in October amid ongoing geopolitical tensions in the Middle East and cheaper valuations in the Chinese stock market. FPI outflows recorded in October 2024 were the highest ever in a single month in Indian markets. October's FPI outflow hit a 10-month high, the highest sell-off from the Indian market year-to-date (YTD).
In October, foreign institutional investors (FIIs) sold ₹1,13,858 crore through exchanges. In November, the amount declined to ₹39,315 crore. According to the expert, the FII strategy change is reflected in stock price movements, particularly in large-cap banking stocks where FIIs have been sellers.
According to D-Street analysts, FII selling in November was lower than in October, partly due to the reduced valuations caused by the market correction. However, market analysts noted that despite the sell-off in equities, the trend of FII buying through the primary market continued in November.
“FIIs turning buyers in December, in a total reversal of their sustained selling strategy during the last two months, has altered the market sentiments in favour of the bulls. Encouraged by the FII buying, retail investors, too, have jumped onto the buying bandwagon,” said analysts at Geojit.
Will FPI inflows continue in the near term?
FII buying has triggered a rally in large caps, particularly in banking and IT. According to Dr. V K Vijayakumar of Geojit, even though FIIs have turned buyers in December, they have also been large sellers on certain days. “This indicates that at higher levels, they may again turn sellers since Indian valuations continue to be relatively high compared to other markets. The rising dollar is another concern that might prompt FIIs to sell at higher levels,” he warned.
Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and individual circumstances may vary.
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