FPIs Pour In Rs 378 Crore In Equities In November, Debt Market Sees Inflow Of Rs 12,400 Crore

This development followed FPIs selling Indian equities worth Rs 24,548 crore in October and Rs 14,767 crore in September, official data revealed.

Foreign Portfolio Investors (FPIs) trimmed their bearish outlook on Indian equities during November as they poured in Rs 378 crore in investments owing to the sharp plunge in US treasury bond yields. 

This development followed FPIs selling Indian equities worth Rs 24,548 crore in October and Rs 14,767 crore in September, official data revealed. Prior to the outflow, FPIs were consistently buying Indian equities in the six months period from March to August and poured in Rs 1.74 lakh crore during the period, reported PTI.

Commenting on the investment trend, Hitesh Jain, strategist, Institutional Equities Research at YES Securities India, said, “Overall, the cumulative trend for 2023 remains healthy, with FPIs pouring in Rs 96,340 crore so far this calendar year. On the way ahead, we think that improving risk appetite in the EM (emerging markets) and falling risk-free yields in the US will draw FPI flows towards India.”

Further, the official data revealed that FPIs invested Rs 378.2 crore in Indian equities this month, as of till November 24. Notably, these investors remained buyers on four days in the month with a big buying of Rs 2,625 crore on Friday. 

“The better-than-expected decline in inflation in mid-October US has given the market confidence to assume that the Fed is done with a rate hike. Consequently, the US bond yields have declined sharply with the 10-year benchmark bond yield correcting from 5 per cent in mid-October to 4.40 per cent now. This has forced FPIs to slow down their selling,” V K Vijayakumar, chief investment strategist, Geojit Financial Services said. 

Further, elaborating on the investments trend, Himanshu Srivastava, associate director - manager research, Morningstar Investment Adviser India, noted, “Uncertain global factors continue to dictate the direction of foreign investments into the India equity markets.”

However, the debt market saw an influx of Rs 12,400 crore in the reporting period, after an inflow of Rs 6,381 crore in October, data indicated. “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. Additionally, Indian debt is relatively attractive compared to debt in other emerging markets. Besides, Indian debt offers a relatively high yield compared to debt in developed markets,” commented Bhuvan Rustagi, COO and co-founder, Per Annum and Lendbox. 

Providing an insight into the sectoral trend, Vijayakumar noted, “In terms of sectors,  FPIs are likely to buy banking which they have been selling during the last 3 months. A large-cap led rally is likely in the market, going forward.”

Jain also said, “Sectors like capital goods and consumption will attract flows amid the government's emphasis on Capex and rural spending ahead of the national elections next year.”