EQUITIES PREFERRED PICK IN NOV; FPIS BUY SHARES WORTH ₹31,630 CR SO FAR

After a mild selloff in October, the equities market witnessed a huge buying appetite from foreign portfolio investors (FPIs) to the tune of ₹31,630 crore so far in November. Strong buying in equities has offset the selloffs in debt and hybrid markets in the current month. FPIs who made record-high selloffs in equities in the first six months of 2022, have made notable buying in the second half so far. Last week, FPIs picked up equities in the last two trading sessions after FOMC minutes indicated a less hawkish stance going forward which led to a drop in the dollar and yields. Sensex hit a fresh historic high, while Nifty 50 is also closing the gap between its all-time high. The buying trend in FPIs for Indian stocks is expected to continue.

As per NSDL data, FPIs have infused about ₹31,630 crore between November 1st to 25th in the Indian stocks. On the other hand, FPIs sold ₹2,297 crore in the debt market and ₹214 crore in hybrid schemes. They made slight buying to the tune of ₹479 crore in debt-VRR instruments.

Due to huge buying in the equities, overall, in the Indian market, FPIs have made an investment of ₹29,599 crore between November 1-25.

Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services said, "FPI investment is showing a distinctly positive trend in November. FPIs have been buyers in financial services, IT, autos, and capital goods. As per NSDL data FPIs have bought equity worth ₹31630 crores till November 25th."

In October month, FPIs were net sellers with an outflow of merely ₹8 crore in the Indian equities.

Between January to June this year, FPIs sold a record ₹2,17,358 crore in equities. However, between July 1 to November 25, 2022, FPIs have been net buyers with an inflow of around ₹80,191 crore.

Meanwhile, FIIs have infused around ₹11,358.48 crore in the Indian market cumulatively so far in November, as per NSE data. In the previous month, FIIs removed about ₹489.06 crore from equity shares.

Last week, on Friday, the Sensex touched a new historic high of 62,447.73, while the Nifty 50 clocked a fresh 52-week high of 18,534.90.

So far, in November, benchmarks Sensex and Nifty 50 have climbed by nearly 3% each. Currently, Nifty 50 is closing the gap towards its lifetime high of 18604.

Overall, due to buying in the second half of 2022, the net selloffs in the equity market have subsided by a certain amount. Now, overall, FPIs outflow is around ₹1,37,167 crore year-to-date.

Giving an outlook on FPIs' performance, Vijayakumar said, "FPIs are unlikely to be major sellers, going forward since their earlier policy of continuous selling in banking has cost them heavily. When FPIs were sellers earlier, DIIs were buyers and they gained from the FPI policy of sustained selling. FPIs were selling earlier ( total selling in equity in 2022 is ₹1,37,166 crore till November 25th) since the dollar was continuously rising."

He added, "Now the market construct in the US has changed to ' rising equity, falling yields, and falling dollar '." Further, he said, "this is favourable for the continuation of FPI flows, going forward."

Further, explaining in detail, Manoj Purohit, Partner & Leader – Financial Services Tax, BDO India said, "The Indian equity market has managed to attract foreign investors and the credit goes to the steady performance of the Indian economy despite the global headwinds of the ongoing military war, fluctuating fed rates and fear of recession knocking on the door."

According to Purohit, a few other factors that are driving the India growth story and attracting foreign investments are the highest-ever tax collection numbers, upward shift in domestic consumption due to the festive season, reporting of positive corporate earnings, strong valuations, successful IPOs, Government efforts in announcing regulations for attracting offshore investors for capital infusion in start-ups, angel funds and promoting digitisation, innovation, and the technology space. Other Emerging Markets such as Brazil, Indonesia, Taiwan, etc. are also seeing a similar trend in terms of foreign cash flows.

Purohit We expect the aggressiveness in pumping cash into equities to continue in the coming months as well. With the slowing down on hiking of rates, inflation under control, and the economy being well incubated, we see no reason for India to not be in the leading position and most preferred choice by the international community, not only for equity but also other markets in the long term."

Source : Livemint