Bulge bracket Foreign Portfolio Investors (FPIs) have re-entered the Indian equity markets with a vigorous buying spree, propelling benchmark indices to new heights in the final month of 2023.
The substantial surge in the market during December coincided with a noteworthy increase in FPI inflows, reaching Rs 58,372 crore for the month. When factoring in investments through the primary market and other channels, the total FPI inflows for December amounted to Rs 66,134 crores.
V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services, noted, "The last two months of 2023 have witnessed significant investments by FPIs, thanks to the sharp decline in US bond yields and the weakening dollar. FPI inflows, which were negative in the three months before December, have sharply turned positive in December."
The cumulative FPI flows for the entire year of 2023 reached Rs 1,71,106 crore.
In December, FPIs displayed strong interest in financial services and the IT sector. Additionally, they made notable purchases in sectors such as autos, capital goods, oil and gas, and telecom.
Anticipating further declines in US interest rates in 2024, FPIs are likely to increase their purchases during the early months of the year, particularly in the lead-up to the general elections. FPI inflows into debt are also expected to accelerate in 2024.
Vijayakumar emphasized, "FPI inflows can help accelerate the uptrend in the main benchmark indices since the bulk of the FPI flows will be into large-caps." The positive momentum from FPI investments is anticipated to play a significant role in shaping market trends in the coming months.
(With Agency Inputs)
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