Foreign Portfolio Investors (FPIs) continued their bullish trend, injecting nearly Rs 4,800 crore into the Indian equity markets during the first week of January, bolstered by strong faith in the country's robust economic fundamentals.
Simultaneously, they channeled around Rs 4,000 crore into the debt market within the same timeframe, as reported by depositories.
Geojit Financial Services' Chief Investment Strategist, V K Vijayakumar, predicts an upsurge in FPI purchases, particularly in the initial months of the year leading up to the general elections. This projection aligns with expectations of a prolonged decline in US interest rates in 2024, driving investor confidence.
Anticipating an acceleration in FPI inflows into debt, Vijayakumar envisions a favorable trend for the segment in 2024.
The latest investment spike saw foreign investors injecting a net Rs 4,773 crore into Indian equities by January 5. This follows a substantial investment surge of Rs 66,134 crore in December and Rs 9,000 crore in November.
Analyst Himanshu Srivastava from Morningstar Investment Research India notes that the recent influx coincided with investors awaiting cues on interest rates from the US Fed meeting minutes released last week.
Kislay Upadhyay, Manager and Founder of Fidel Folio, emphasizes the attractiveness of India's domestic investor flow, impressive Q2FY24 GDP growth figures, robust corporate earnings, and a healthy banking sector, all of which serve as significant draws for foreign investors.
Upadhyay underlines the confidence in political stability stemming from December's state election results as a catalyst, setting the stage for a bullish trend supported by FPI inflows.
Highlighting the desire to position early before major events—the Indian general elections and anticipated Fed rate cuts—Upadhyay suggests investors' eagerness to capitalize on these potential market-moving events.
In 2023, FPI flows amounted to Rs 1.71 lakh crore in equities and Rs 68,663 crore in the debt markets, collectively infusing Rs 2.4 lakh crore into the capital market.
This bullish trend in Indian equities contrasts sharply with the preceding year's worst net outflow of Rs 1.21 lakh crore in 2022, attributed to aggressive rate hikes by central banks globally. Prior to this outflow, FPIs had consistently invested in the market for three consecutive years.
(With Agency Inputs)
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