FPIs pour ₹28,888 crore into equities in the first fortnight of November

• Foreign portfolio investors (FPI) are flocking to the Indian equity markets, pouring in ₹28,888 crore in the first fortnight of November.
  
• In November so far, India’s benchmark indices Nifty50 and Sensex have both gained between 1.9-2.2%.
  
• “India is an island of prosperity and money should continue flowing,” Sharad Chandra Shukla, director, Mehta Equities, told Business Insider India.
  

Foreign portfolio investors (FPI) are flocking to the Indian equity markets, pouring in ₹28,888 crore in the first fortnight of November, making it the best first fifteen days of any month in 2022 so far.

In the first fifteen days of November, India’s benchmark indices Nifty50 and Sensex have both been on an upward trajectory – while Nifty50 gained 2.2%, Sensex rose 1.9%. Both the indices have also created new all-time highs in the first half of trading on Wednesday, and analysts say there’s more potential upside in store.

Prashanth Tapse, research analyst, senior VP (research), Mehta Equities, said that the year-end rally should take Nifty50 above the 19,000 mark.

“While the undertone of the market remains cautious to intra-day volatility, cooling US inflation, sluggish crude oil price, expectations of the slow pace of rate hikes by the US Fed, and hopes of easing coronavirus restrictions by China could further boost investors' confidence,” he added.

The first fortnight of November is also the second-best stretch of FPI flows – only the month of August had better inflows, with FPIs buying ₹51,204 crore worth equities.

For context, FPIs were net sellers in the first half of October, with net equity outflows of ₹7,458 crore. This reversed in the second half of the month, with FPIs purchasing equities worth ₹7,449 crore, with the month ending almost flat with net outflows of ₹8 crore.

Since then, flows into equities have accelerated, with FPIs being net sellers on only one day in November in the first half of the month.

“India is an island of prosperity and money should continue flowing,” Sharad Chandra Shukla, Director, Mehta equities, told Business Insider India.

“September quarter earnings have been good, in fact banks have done extraordinarily well. Credit growth is picking up for each and every bank, which means there will be investments. If the capex cycle starts, there will be growth in the future, so these are positive indicators,” he added.


“FPIs have turned buyers over the last 1-2 weeks despite record valuation premium relative to both MSCI emerging markets and developed markets, deteriorating global growth outlook, and strengthening Dollar index,” HDFC Securities said in a report earlier this month.

On the other hand, domestic institutional investors (DII) have turned net sellers in November, according to data from NSE. While foreign institutional investors (FII) poured in ₹13,358 crore in the first half of November, DII pulled out ₹6,147 crore in this period.

“Domestic investors are booking profits. They were buying when the markets were between 15,000-17,000. Now that someone [foreign investors] is supporting the market, they are taking some money off the table,” Shukla said, explaining the reason behind DII outflows in November.

Will the FPI buying trend continue?

According to Shukla, the buying trends by FPIs should continue in the near future.

“Unless there are major geopolitical triggers or the US Fed decides to do another 75 basis point rate hike or inflation is not under control, FPI buying should continue in the near term,” he said.

However, he added that the pace of buying by FPIs will continue at the current pace and the possibility of a further acceleration looks remote at this point.

“Unless Russia and Ukraine come to a settlement, and the US Fed decides to not hike rates any more, I don’t see any further acceleration at this point,” Shukla added.

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