After selling rigorously for more than two months, foreign investors have again started buying Indian equities. As per data available, they made a net investment of Rs 22,766 crore in the first two weeks of December as valuations became attractive and expectations of rate cut by the US Federal Reserve gained momentum,
"The total buy figure including the exchange buying and buying through the ‘primary market and others category’ stood at Rs 22765 crores as on 13th December (NSDL).
FII buying has triggered a rally in largecaps particularly in banking and IT,” said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
“Even though FIIs have turned buyers in December, they have been large sellers,too, on certain days. This indicates that at higher levels, they may again turn sellers since Indian valuations continue to be relatively high compared to other markets. Rising dollar is another concern which might prompt FIIs to sell at higher levels,” added Kumar.
This revival comes after the FIIs pulled out a net Rs 21,612 crore in November and a massive Rs 94,017 crore in October -- the worst monthly outflow on record. Interestingly, September had marked a nine-month high for FPI inflows, with a net investment of Rs 57,724 crore, highlighting the volatility in foreign investment trends.
With the latest inflow, FIIs investment has reached at Rs 7,747 crore in 2024 so far, data with the depositories showed.
Vipul Bhowar, Senior Director - Listed Investments, Waterfield Advisors said that the recent rally in the Indian market has been driven by positive political developments, a recovery in corporate stocks, increased foreign investments – both in primary and secondary markets and broad sector participation. He added that historical data shows that the Nifty index has closed higher in 71 per cent of December since 2000, with significant gains noted in 2023 and 2020.
“The Reserve Bank of India (RBI) enhanced liquidity by lowering the Cash Reserve Ratio (CRR), likely boosting market sentiment. Additionally, India's Consumer Price Index (CPI) inflation dropped to 5.48 per cent in November from 6.21 per cent in October, enhancing investor confidence and raising hopes for potential monetary policy easing by the RBI," said Bhowar.
"While moderate economic growth is projected for India in 2025, various challenges could impact the sustainability of this growth. Easing monetary policy from central banks could help by lowering borrowing costs,” he added.
After falling up to 77,000 level last month, equity benchmark index BSE Sensex has surged more than 6 per cent in one month. On Friday, the Sensex settled at 82,133.12, up 843.16 points, or 1.04 per cent. The Nifty50 settled at 24,768.30, up 219.60 points, or 0.89 per cent.