In November, foreign portfolio investors (FPIs) made a net investment of Rs.31,630 crore in Indian shares in the expectation that the aggressive rate hikes would come to an end and because they were optimistic about the macroeconomic outlook as a whole. After continuing to be net selling in August and September, analysts believe that FPIs are unlikely to be significant sellers going forward.
FPI inflows are also being fueled by rising expectations of aggressive rate hike cycles coming to an end on relatively easing inflationary curves, better-than-expected US macroeconomics data, and the resilience of the Indian economy relative to other global economies.
Data that is readily available from the depositories shows that between November 1 and November 25, FPIs invested a net amount of Rs. 31,630 crore in stocks. In contrast, there was a net outflow in September and October of Rs.7,624 crore and 8 crore, respectively. FPIs bought stocks worth Rs.5,000 crore in July and Rs.51,200 crore in August, totaling Rs.51,200 crore in net purchases.
Prior to this upward trend, commencing in October 2021 and accompanied by a steady increase in the dollar, FPIs remained net sellers for nine consecutive months. Given the geopolitical concerns, FPI flows are anticipated to remain turbulent in the foreseeable future, according to Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities.. So far this year, the total outflow by FPIs in equities stood at Rs.1.37lakh crore.