FPIs Pump Rs 22,765 Crore Into Indian Equities in December

Foreign Portfolio Investors (FPIs) have maintained their buying momentum in Indian equities during December, registering net inflows of Rs 22,765 crore as of mid-month, according to depositories data. The inflows have largely been selective, with net investments through stock exchanges amounting to Rs 14,435 crore by December 13.

The resurgence of FPI activity has provided a significant boost to the Indian secondary market, propelling equity benchmarks higher in the past week. This marks a sharp turnaround from the substantial outflows of Rs 21,612 crore recorded in November and the massive withdrawal of Rs 94,017 crore in October. Notably, FPIs had also infused Rs 57,724 crore into Indian equities in September.

Despite heavy selling in Indian equities over the past two months, FPIs have been active participants in primary markets, investing over Rs 1.10 lakh crore in the calendar year. As of December, net FPI investments in Indian equities for 2024 stand at Rs 7,747 crore. Market observers indicate that if the current trend persists through the end of the year, this will mark the second consecutive year of net FPI buying in Indian equities.

V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, stated, “FPIs turning buyers in December after relentless selling in October and November has contributed to the recovery in the market from the November lows. FPI buying has triggered a rally in largecaps, particularly in banking and IT.”

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Concerns Over Valuations

However, Vijayakumar highlighted that FPIs have also been significant sellers on certain trading 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,” he cautioned.

Vipul Bhowar, Senior Director of Listed Investments at Waterfield Advisors, attributed the recent rally in the Indian equity market to positive political developments, recovery in corporate stocks, increased foreign investments in both primary and secondary markets, and broad sectoral participation.

“Historical data shows that the Nifty index has closed higher in 71 per cent of Decembers since 2000, with significant gains noted in 2023 and 2020,” Bhowar remarked. He further noted that while favorable conditions and positive investor sentiment have underpinned recent market movements, the outlook for 2025 remains cautiously optimistic amid potential challenges.

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