FPIs turn positive with net inflow of ₹9,000 crore in Indian equities during November

Foreign portfolio investors (FPIs) turned net buyers in the Indian stock market in November after three consecutive months of selling. A decline in the US treasury yields and softening of dollar amid rising bets that the US Federal Reserve is done with raising key interest rates have triggered foreign fund inflows into emerging markets like India.

FPI inflows into Indian equities during November stood at ₹9,001 crore, compared to over ₹39,000 crore worth of shares sold in September and October together, according to data from the National Securities Depository Ltd (NSDL). Taking into account debt, hybrid, debt-VRR, and equities, FPI inflows were at ₹24,546 crore during the month.

Also Read: Nifty hits a new record, F&O rollovers signal momentum

On 1 December, 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

Indian stock markets witnessed strong gains last week, with the benchmark Nifty50 index 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 boosted market sentiment. 

The Indian economy grew a better than expected 7.6% in the fiscal second quarter (July-September).

Both the Nifty50 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 Nifty50 rose 134.75 points, or 0.67%, to settle at 20,267.90.

“Nifty hit a record high on the back of a strong November, being the best month of 2023. Global and domestic Investors' participation, exit polls and Q2FY24 GDP data have helped the market reach record highs. Benchmark indices for the fifth consecutive week. This week all sectoral indices ended with gains,” said Arvinder Singh Nanda, Senior Vice President, of Master Capital Services Ltd.

Meanwhile, in November, 10 mainboard IPOs listed in India, of which 8 were listed with premiums. This year has been a record year for IPOs, the highest in decades with optimistic market conditions and helped companies raise capital, he noted.

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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.

“The market will react to the domestic and global macroeconomic data, global bond yield, crude oil inventories, movement of the dollar index, FII and DII investment activities. Upcoming events for the next week will impact the market such as S&P services PMI for major economies like India, the USA and the UK, US ISM Non-manufacturing Prices, US trade balance, Initial jobless claims, employment rate, Nonfarm payrolls, India’s Interest rate decision and forex reserve should be watched,” Nanda said.

Also Read: FIIs make a stellar comeback! Turn net buyers in last 6 sessions with net inflow of ₹13,474 crore; DIIs left behind

What do technical charts show?

According to Nanda, as long as the Nifty 50 index holds 20,000 (psychological mark-19,800 low of the week), marching towards 20,500 looks likely in the coming days despite intermittent consolidation. With the hurdles placed at 20,350-20,400, where 20,000 will act as an immediate support.

Meanwhile, the Bank Nifty continued its higher highs and higher lows formation for five days in a row. 

“The index rebounded after a day of small profit-taking and climbed 332 points to 44,814 on Friday with above-average volumes, forming a bullish candlestick pattern with a minor upper shadow on the daily scale. On the downside, a substantial support level rests at 44,300, where the immediate hurdle on the upside is positioned at 45,000,” Nanda said.

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