Going forward, the New Year is expected to witness declines in U.S. interest rates, and FPIs are likely to increase their purchases in 2024, V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said.
According to the data, FPIs made a net investment of Rs 57,313 crore in Indian equities in this month (till December 22). This was the highest monthly inflow by them in a year.
This came following a net investment of Rs 9,000 crore in October.
Before this overseas investors withdrew 39,300 crore in August and September, data with the depositories showed.
The robust inflow from FPIs into the Indian stock markets can be attributed to various factors. Primary among these are political stability and positive sentiments prevailing in the Indian markets, Himanshu Srivastava, Associate Director- Manager Research, Morningstar Investment Research India, said.
Also, the country’s stable and robust economy, coupled with impressive corporate earnings and a string of Initial Public Offerings (IPOs), has attracted foreign investors to explore investment opportunities in India, he added. Vijayakumar said that the steady decline in U.S. bond yields has caused this sudden change in the strategy of FPIs.
“India’s market engine is revving: Strong GDP growth exceeding estimates, coupled with a burgeoning manufacturing sector, paints a vibrant picture for investors, ” Mayank Mehraa, smallcase manager and principal partner at Craving Alpha, said.
Globally, the US Fed has signalled three potential rate cuts next year, indicating the end of the rate hike cycle, which bodes well for emerging markets like India.
Bhuvan Rustagi, COO and Co-Founder, of Per Annum & Lendbox, said that easing Fed tightening, declining US treasury yields, and softening dollar.
Additionally, there were India-specific factors that prompted FPIs to invest such as robust economic growth, political stability, improved corporate earnings, and attractive valuations.
With regards to bonds, the debt market attracted Rs 15,545 crore during the period under review. This came after receiving an inflow of Rs 14,860 crore in November and Rs Rs 6,381 crore in October, data showed.
In terms of sector, FPIs were big buyers in financial services and also showed interest in sectors like autos, capital goods, and telecom.
