Aiming To Reduce The U.S. Inflation, F.P.I. Invests Rs10,555 Cores in Equities In December

International investors, who had already invested over Rs 36,200 crore last month, kept up their positive trend in December, buying a total of Rs 10,555 crore worth of Indian stocks as oil prices have stabilized and U.S. inflation has moderated. However, according to Shrikant Chouhan, head of equity analysis (retail), Kotak Securities Ltd., F.P.I. flows are expected to be risky in the future as equity markets around the world experience an increase in volatility as global central banks reiterate their intention to keep insurance rates high for an extended period to reduce elevated inflation in their respective economies.

Additionally, the direction of capital flows will likely be determined by changes occurring worldwide, mainly by U.S. bond rates and the greenback index trends. V Okay Vijayakumar, Chief Investment Strategist, stated that this, in turn, will be determined by the trend of U.S. inflation.

Foreign Portfolio Investors (F.P.I.s) made a total investment of in shares between December 1 and December 16 Rs 10,555 crore, according to statistics from the depositories.

This follows a net investment of over Rs 36,200 crore in November, mostly due to a decline in the U.S. dollar index and optimism on overall macroeconomic trends.

Information from the depositories before this indicated that foreign purchasers withdrew Rs 8 crore in October and Rs 7,624 crore in September.

Manish P. Hingar, the creator of the financial planning website Fintoo, credited the most recent F.P.I. inflows into Indian equity markets to improve risk sentiment and stabilization in oil prices.

As overseas purchasers take their Christmas and New Year holidays after December 15, flows might occasionally dry up, he warned.

“With the inflation ranges in the U.S. moderating, the F.P.I.s have been pumping funds in the Indian equities. This was carried out with the anticipation of the Fed easing off from its aggressive charge hikes,” JARVIS Invest, an AI-based platform for fundraising guidance, was founded and is led by Sumit Chanda.

The benchmark rate was, however, increased by 50 basis points by the U.S. Fed at its most recent meeting. So it hasn’t backed down from its hawkish posture and will probably increase the costs. The impact of this was evident in the Indian markets, which corrected by around 1.2% in a single week.

In terms of industries, F.P.I.s have been buyers in the financial and capital goods industries and sellers in the telecom industry.

F.P.I.s have taken a total of Rs. 1.22 lakh crore out of the fairness markets in 2022.

“Despite this massive F.P.I. selling, the Nifty is up by over 5 percent so far for 2022. The fact that F.P.I. selling has been absorbed by DII and retail buying is a reflection of the rising clout and maturity of domestic investors,” Vijayakumar from Geojit made a reference.

On the other hand, the debt markets have seen a net withdrawal of Rs 2,180 crore from foreign purchasers this month.

The Philippines, South Korea, Taiwan, Thailand, and Indonesia are all emerging countries with negative F.P.I. flows so far in December, except for India.