FPIs invest ₹3,864 crore in Indian equities so far in January; Will inflows sustain in 2024?

FPIs have bought ₹3,864 crore worth of Indian equities and the total inflow stands at ₹9,034 crore as of January 12, taking into account debt, hybrid, debt-VRR, and equities, according to National Securities Depository Ltd (NSDL) data. FPIs were big players in financial services and information technology (IT), according to analysts.

Also Read: FPIs pump ₹2.37 lakh crore in Indian markets in 2023; December clocks highest inflows at ₹66,135 crore

“The surge in FPI inflows during December 2023 which stood at ₹58,372 crore, slowed down in early January 2024. As per NSDL data, total FPI investment through the stock exchanges in January up to 13th is ₹2,743 crore,” said Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

FPI activity in Indian markets

The inflow intensified last month on strong global cues after the US Federal Reserve signalled the end of its tightening cycle and raised expectations of a rate cut in March 2024. This led to a crash in US bond yields and triggered foreign fund inflows into emerging markets like India.

In December, FPIs were big buyers in financial services and also in IT. FPIs also bought in sectors like autos, capital goods, oil and gas and telecom, according to Dr. V K Vijayakumar.

For the entire calendar year 2023, FPIs bought ₹1.71 lakh crore in Indian equities and the total inflow stands at ₹2.37 lakh crore taking into account debt, hybrid, debt-VRR, and equities, according to NSDL data. FPIs’ net investment in Indian debt market stands at ₹68,663 crore during 2023.

FPI inflows into Indian equities during November 2023 stood at ₹9,001 crore, compared to over ₹39,000 crore worth of shares sold in September and October together, according to NSDL data. Taking into account debt, hybrid, debt-VRR, and equities, FPI inflows were at ₹24,546 crore during the month.

Overall, only four months in 2023–January, February, September, and October- saw net FPI outflows from Indian equities. May, June, and July each recorded FPI inflows above ₹43,800 crore.

Also Read: Nifty January series outlook: 4 stocks where investors can park their money; do you own?

FPI inflow likely to continue; Here’s why

Analysts noted that India has the best prospects among the emerging economies for sustained growth for many years to come. This growth has the potential to create phenomenal wealth through the stock market. FPIs are investing to benefit from this potential wealth creation, according to analysts.

Going forward, FPI buying is likely to sustain this year as well. FPIs turned buyers in leading banks in 2023 where they had been sellers. Large caps in segments like IT, telecom, automobiles and capital goods also witnessed buying. Moreover, the US Fed’s dovish stance and rate cuts beginning from March 2024 will also likely sustain FPI interest in Indian markets.

‘’The trend is likely to continue, going forward. Since 2024 is expected to witness further declines in US interest rates, FPIs are likely to increase their purchases in 2024 too, particularly in the early months of 2024 in the run up to the General elections. FPI investment in debt is likely to accelerate, going forward,” said Geojits’ Dr. V K Vijayakumar.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

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Published: 13 Jan 2024, 04:23 PM IST