Foreign investors have been aggressively buying Indian equities in November, investing Rs 30,385 crore this month so far, on stabilisation in rupee and resilience of the domestic economy compared to global counterparts.
However, going forward, buying by Foreign Portfolio Investors is unlikely to turn very aggressive as high valuations in India are a headwind, said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Further, valuations in markets like China, South Korea and Taiwan are very attractive now and so more FPI money is likely to move to these markets, he added.
According to data with the depositories, FPIs invested a net sum of Rs 30,385 crore in equities during November 1-18. This came following a net outflow of just Rs 8 crore last month and Rs 7,624 crore in September.
Prior to these outflows, 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.
So far this year, the total outflow by FPIs in equities stands at Rs 1.4 lakh crore.
The latest spurt in net inflows can be attributed to the recent surge in equity markets, stability in Indian economy compared to its global counterparts and stabilisation in rupee, Morningstar India Associate Director – Manager Research Himanshu Srivastava said.
On the global front, lower than anticipated rise in inflation in U.S. raised hopes that the U.S. Federal Reserve may not go for further aggressive rate hikes, which also eased recessionary concerns in the U.S. This helped improve sentiments and directed foreign flows towards Indian shores, he added.
In addition, stabilisation in the global market scenario also helped in enhancing risk appetite among foreign investors.
Strong recovery was seen in the global markets as China slightly eased its ‘zero-COVID policy’, said Shrikant Chouhan, Head – Equity Research (Retail), Kotak Securities.
In terms of sectors, FPI buying were seen in IT, autos and telecom, Vijayakumar added.
On the other hand, foreign investors have pulled out Rs 422 crore from the debt market during the period under review.
Apart from India, FPI flows were positive for the Philippines, South Korea, Taiwan and Thailand so far this month.