FPIs infuse Rs 19,000 cr in equities in Nov on softening US dollar, inflation

New Delhi: This month has seen close to Rs 19,000 crore invested by foreign investors in Indian stocks, mostly as a result of the dollar’s depreciation and the US inflation trajectory stabilising.

Data from the depositories revealed that this followed net outflows of just Rs 8 crore last month and Rs 7,624 crore in September.

Foreign Portfolio Investors (FPIs) were net purchases in August to the tune of Rs 51,200 crore and about Rs 5,000 crore in July prior to these outflows. Prior to that, beginning in October of last year, foreign investors were net sellers of Indian stocks for a nine-month period.

The chief investment strategist at Geojit Financial Services, VK Vijayakumar, predicts that FPIs would increase their purchases in the near future as US inflation shows signs of calming and dollar and US bond yields are falling.

Additionally, among major economies, India’s outlook for earnings growth is the strongest. However, he continued, valuations are becoming inflated. The report shows that between November 1 and 11, FPIs invested Rs 18,979 crore in stocks.

FPIs have sold a total of Rs 1.5 lakh crore worth of stocks so far this year. FPIs were initially sellers in October, but the sell-off slowed drastically as a result of a slight recovery in market mood, and they made a big comeback in the month of November.

The recent inflow was attributed by Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities, to the dollar index, global bond yields, and a softerening of inflation.

“The resilience that Indian equity markets have displayed amid the global turmoil, and the way it has held up against odds and negative cues in recent times have not gone unnoticed. As the equity markets have surged relentlessly in recent times, foreign investors have returned to not miss out on the return potential that it offers,” Morningstar India Associate Director – Manager Research Himanshu Srivastava said.

A relatively strong quarterly result also reflects the perception that the Indian economy is now more stable than its international peers. Additionally, he continued, the rupee’s stabilisation against the dollar would have encouraged FPIs to invest in Indian stocks.

The macroeconomic front, US Fed rates, volatility in crude oil prices, shifting US bond yields, and the dollar index, according to Manoj Purohit, Partner & Leader – Financial Services Tax, BDO India, had a crucial role in influencing investor sentiments.

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