FPIs Continue To Maintain Strong Sentiment In Equities In Dec, Find Out Why

This revival in sentiment followed major outflows seen in the preceding months, with net withdrawals at Rs 21,612 crore in November and Rs 94,017 crore in October

Foreign portfolio investors (FPIs) continued to maintain a strong sentiment towards Indian equities in December so far. As of December 13, 2024, the investors poured in Rs 22,766 crore in equities, official data from the depositories revealed.

During the same period, the FPIs infused Rs 4,814 crore in the debt general limit and withdrew Rs 666 crore from the debt Voluntary Retention Route (VRR), reported PTI. This revival in sentiment followed major outflows seen in the preceding months, with net withdrawals at Rs 21,612 crore in November and Rs 94,017 crore in October.

Reflecting ahead,  Himanshu Srivastava, Associate Director, Manager Research, Morningstar Investment Research India, noted, “Looking ahead, the flow of foreign investments into Indian equity markets will hinge on several key factors. These include the policies implemented under Donald Trump's presidency, the prevailing inflation and interest rate environment, and the evolving geopolitical landscape.”

The expert noted that the investors will be influenced by the performance of Indian firms in the latest earnings season and the country’s economic progress in the coming weeks.

Karthick Jonagadla, smallcase Manager and Founder of Quantace Research, explained, “This was driven by expectations of a US Federal Reserve rate cut. A shift toward monetary easing has improved global liquidity, drawing capital into emerging markets like India. These inflows reflect sustained interest in India as a growth market.”

Notably, the consumer price index (CPI) inflation slipped to 5.48 per cent in November in comparison to 6.21 per cent logged in October. Vipul Bhowar, Senior Director - Listed Investments, Waterfield Advisors said, “The Reserve Bank of India (RBI) enhanced liquidity by lowering the Cash Reserve Ratio (CRR) that boosted investors' sentiment.”

V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, stated, “Even though FPIs have turned buyers in December, they have been large sellers too 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.”