FPIs Resume Selling in November; Withdraw Rs 3,765 Cr from Equities
“`html
FPI Flows Show Signs of Reversal,December Outlook Tied to US Fed & Trade Talks
Foreign Portfolio Investors (FPIs) are exhibiting a shifting pattern in their investment behavior in Indian equities,according to recent analysis. While a rally in the Indian stock market - with the Nifty and Sensex reaching 14-month highs on November 27, 2023 - has boosted sentiment, FPI activity is no longer consistently unidirectional.
Angel One’s Head of equity strategy, Sameer Khan, observed that FPIs are alternating between buying and selling, suggesting a potential trend reversal as global conditions evolve. This follows a net outflow of Rs 3,765 crore from Indian equities in November, driven by global risk aversion, volatility in global tech stocks, and a preference for primary markets over secondary markets. Source: Economic Times
Recent FPI Activity: A Mixed Bag
the November outflow represents a reversal from the net inflow of Rs 14,610 crore seen in October 2023. Improved Q2 corporate earnings and optimistic expectations for Q3 and Q4 have contributed to the positive market sentiment. Though, these gains are tempered by external factors influencing FPI decisions.
Year-to-date (through November 30, 2023), FPIs have withdrawn a total of over Rs 1.43 lakh crore from Indian equities.In the debt market, activity is also mixed: FPIs invested Rs 8,114 crore under the general limit but withdrew Rs 5,053 crore through the voluntary retention route during the same period.
| Market Segment | YTD Flows (INR Crore) |
|---|---|
| Equities | -143,000+ |
| Debt (General Limit) | 8,114 |
| Debt (Voluntary Retention Route) | -5,053 |
December Outlook: US Fed & Trade pact Key
Looking ahead to December 2023, Sameer Khan of Angel One anticipates that FPI activity will be heavily influenced by signals from the US federal reserve regarding potential interest rate cuts and the progress of ongoing trade negotiations between india and the united States.
The US Federal Reserve’s monetary policy decisions have a significant impact on global capital flows,including those to emerging markets like India.Positive developments in the India-US trade relationship could further bolster investor confidence.