After two months of net selling, foreign portfolio investors (FPIs) once again turned to the Indian stock markets in November and invested about Rs 9,000 crore. Along with this, depository data shows that FPIs made a net investment of Rs 14,860 crore in the debt market last month, which is the highest level in six years.
VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said that going forward, the direction of FPIs will largely be determined by the trend of the domestic market. The domestic market is likely to be impacted by the assembly election results of five states. He said, “The market will rise if the results in these states are favorable for the ruling government.
In such a situation, foreign investors would also not want to miss out on taking advantage of that boom.” According to the data, FPIs made a net investment of Rs 9,000 crore in Indian stocks in November. Before this, FPIs had sold Rs 24,548 crore in October and Rs 14,767 crore in September.
However, FPIs continuously bought Indian equities from March to August and invested Rs 1.74 lakh crore in these six months. The revived attraction of FPIs in the Indian market can be attributed to the decline in US bond yields and fluctuations in crude oil prices. Last month, the initial public offerings (IPOs) of two companies IREDA and Tata Technologies also received strong support from investors in the market.
Bharat Dhawan, managing partner of Majors in India, said the strong listings of both these IPOs potentially indicate a positive trend for foreign investors. “The fall in US bond yields may have prompted FPIs to focus their attention on the Indian market for better returns,” said Himanshu Srivastava, associate director and research manager at Morningstar Investments.
Apart from this, the fall in international prices of crude oil has also provided positive support. Overall, the overall outlook for 2023 remains good. So far in this calendar year, FPIs have made a net investment of Rs 1.15 lakh crore.
The debt market attracted Rs 14,860 crore in bonds in November, data showed. This was the highest investment since October 2017, when Rs 16,063 crore came in. The inclusion of Indian securities in JPMorgan’s Emerging Markets Government Bond Index has increased participation of foreign funds in the domestic bond markets. So far this year, foreign investors have invested a net Rs 50,270 crore in the Indian debt market.
