”The indication of political stability after the 2024 General elections, strong growth momentum in the Indian economy, inflation cooling off, steady decline in U.S. bond yields, and the correction in Brent crude has turned the situation in India’s favour, ” V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services said
Foreign portfolio investors (FPIs) injected Rs 26,505 crore into the Indian equity markets in the first six trading sessions of this month on expectations of political stability after the BJP stormed to power in three major states and robust economic growth.
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.
Going forward, FPI inflows are likely to continue, V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said.
According to the data, FPIs made a net investment of Rs 26,505 crore in Indian equities in this month (till December 8).
Kislay Upadhyay, the founder of FidelFolio Investments, attributed the FPI inflows to the outcome of major state elections that signalled political stability going forward..
”The indication of political stability after the 2024 General elections, strong growth momentum in the Indian economy, inflation cooling off, steady decline in U.S. bond yields, and the correction in Brent crude has turned the situation in India’s favour, ” Vijayakumar said.
Globally, the US Federal Reserve signalled potential rate cuts starting from the first quarter of next year, indicating a shift away from the high-interest rate environment. This change led to the weakening of the US dollar against other currencies, Himanshu Srivastava, Associate Director – Manager Research, Morningstar Investment Research India, said.
Moreover, the decrease in US Treasury Bond yields has prompted foreign investors to re-evaluate investing in Indian equity markets, considering its improving risk-return profile, he added.
In terms of sector, FPIs have turned buyers into leading banks where they have been sellers. Large caps in segments like IT, telecom, automobiles and capital goods are also witnessing buying.
With regards to bonds, the debt market attracted Rs 5,506 crore during the period under review. This came after receiving a six-year high inflow of Rs 14,860 crore in November and Rs Rs 6,381 crore in October, data showed.
So far this year, FPIs have invested Rs 1.31 lakh crore in the equity markets and Rs 55,867 crore in the debt markets.