- Foreign investors invested Rs 84,291 crore in Indian equities in November after two months of outflows
- Global AI stock sell-off and Asian market slump pushed investors to Indian markets
- Q2 corporate earnings in India showed resilience with more beats than misses
Foreign investors have made a strong comeback into Indian equities in November, with foreign portfolio investments crossing Rs 84,000 crore. The latest surge comes followin sharp sell-off in global AI-linked stocks, strong corporate earnings and a broader Asian market slump that have pushed investors toward India.
In November so far, FPIs invested Rs 84,291 crore in Indian equities, following two consecutive months of outflows. Net outflows in October stood at Rs 34,843 crore and Rs 35,861 crore in September, according to NSDL data.
What's driving positive FPI momentum?
The latest momentum comes following a reversal in the global AI trade that led to significant foreign investor outflows from Asian markets, with South Korea and Taiwan witnessing nearly $45 billion in FII outflows in October. Additonally, Indian companies have posted a resilient performance in Q2 so far, with more earnings beats than misses, indicating strength in corporate earningsMeanwhile, US bond yields have cooled off from their recent highs, while lower crude oil prices provide additional support to Indian markets.
"The sudden change in FPI stance was triggered by the AI sell-off in the US and other AI markets like South Korea, Taiwan and Japan. This sell-off, in turn, was triggered by fears surrounding data centre spending in the US. The Democrats, who won both the chambers of the Congress, are opposed to indiscriminate data centre spending. They will demand guard rails for AI," according to V K Vijayakumar, Chief Investment Strategist, Geojit Investments Limited.
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The global rally in artificial intelligence stocks took a hit as investors reassessed the implications of the US midterm election results, with Democrats securing control of both chambers of Congress. The Dow Jones and Nasdaq recently posted their sharpest single-day declines in 19 months.
Major Asian markets such as China, Taiwan, South Korea, and Japan have tanked after AI lined sell-off. Tech-heavy markets like South Korea and Taiwan witnessed nearly $45 billion in foreign portfolio outflows in just October. The indcates the preference of investors for domestic market when export-driven and hardware-heavy Asian economies face sustained pressure.
Additionally, corporate earnings mostly beat estimates even as global margin pressures continued. Global brokerage BofA Securities has maintained its bullish outlook on the Indian stock market, estimating the Nifty 50 index to deliver a 4.7% upside from current levels. The brokerage maintained its year-end Nifty 50 target at 26,200. It noted an improvement in corporate earnings growth, which accelerated to 13% in Q1FY27 and is estimated at 18% in the second quarter.
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