Foreign Portfolio investors turned net buyers of Indian equities in the first nine days of November, investing Rs 53,739 crore after two consecutive months of outflows, led by the AI-linked sell-off in global markets, strong corporate earnings and attractive large-cap valuations.
The latest infusion comes after net outflows of Rs 34,843 crore in October and Rs 35,861 crore in September, according to NSDL data.
What Is Driving The Return Of FPIs?
"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," according to V K Vijayakumar, Chief Investment Strategist, Geojit Investments Limited.
"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," he added.
The global AI sell-off has made India, typically considered as a non-AI trade destination, an attractive destination for FPIs. Additionally, the country's strong earnings growth and valuations of large-cap stocks have further impressed investors.
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As per depository data, FPIs have invested Rs 53,739 crore in Indian equities from November 2-9. This includes a only six trading days. Following this, the total FPI outflows from Indian equities in the year stood at Rs 2.41 lakh crore.
Sectorally, FPIs turned major buyers in index heavyweights, especially in financial services, information technology, automobiles and telecom.
In terms debt, foreign investors invested Rs 7,759 crore through the Fully Accessible Route (FAR), while withdrawing Rs 591 crore through the Voluntary Retention Route (VRR) and Rs 270 crore through the general route amid a strengthening rupee and easing bond yields.
FPI holdings in FAR government securities rose to Rs 3.65 lakh crore on November 9 from Rs 3.57 lakh crore on November 2, an increase of around Rs 7,968.782 crore, according to the data compiled by PTI from Clearing Corporation of India (CCIL).
In the same period, the Indian rupee appreciated from 94.90 on November 2 to 93.74 against the US dollar today, while the yield on the 10-year benchmark government security eased by nearly 0.14 per cent to 7.178 per cent on Monday from 7.315 per cent on November 2. The rupee's recovery was supported by softer crude oil prices, stronger foreign fund inflows and hopes of easing tensions in West Asia.
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