After withdrawing funds in the last two months, foreign investors invested ₹15,280 crore in Indian equities in the first week of November on hopes that US Federal Reserve would go soft on rate hikes, reported Press Trust of India.
Foreign Portfolio Investors (FPIs) flows are likely to stay volatile in the near term given the headwinds of monetary tightening, geo-political concerns among others, Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities, said.
According to the data with depositories, FPIs invested ₹15,280 crore in equities during November 1-4. This came following a net outflow of just ₹8 crore last month and ₹7,624 crore in September.
Prior to these outflows, FPIs were net buyers in August to the tune of ₹51,200 crore and nearly ₹5,000 crore in July. Before that, foreign investors were net sellers in Indian equities for nine months in a row which started in October last year.
So far this year, the total outflow by FPIs in equities has reached ₹1.53 lakh crore.
FPIs were sellers in October initially but the sell-off had slowed drastically on the back of some improvement in the sentiments in the global markets.
Further, in the current month, foreign investors made an investment in hopes that the aggressive rate hike cycle is nearing its end. Also, some of the macro-economic data in the US turned out to be better than expected, thereby indicating a lower probability of any immediate adverse impact on the US economy, Himanshu Srivastava, Associate Director - Manager Research, Morningstar India, said.
"The strong FPI flows in Indian markets in the first week of November was on the back of expectations that the US Fed in its FOMC (Federal Open Market Committee) meeting announcement on the 2nd of November would turn more dovish than they had been in the past post another 75 bps rate hike. This has led to a risk on the environment globally thus leading to increased FPI flows to India," Manish Jeloka, Co-head of Products & Solutions, Sanctum Wealth, said.