New Delhi Foreign portfolio investors (FPIs) have been net buyers of equities in November despite a hike in interest rates and a tough stance by the US Federal Reserve. This is helping the market to gain despite selling in the cash markets by domestic institutions. However, various US data such as retail inflation, jobs and PMI should be helpful for FPIs to continue buying, said experts. Clarity on the interest rate trajectory and stability of the rupee are among the key factors driving FPI buying.
“FIIs have become net buyers. However, whether or not this situation will continue depends on the cool-off on the job and PMI data in the US. In the absence of this, we cannot expect FIIs to continue buying activity,” said Shrikant Chauhan, Head of Equity Research (Retail) Kotak Securities Ltd.
FPIs were net buyers of equities worth approx. 9,961.84 crore between November 1 and 4 and bought equities of total 1,948 crore on 7 November. Domestic investors had sold equities of total 1 to 4 November and . 2,941 crore worth equity between 844 crores on 7th November.
The Sensex and Nifty gained over 1% during November on the back of foreign inflows.
The favorable factor for FII inflows remains a sound Indian economic outlook and growth. Vikram Kasat, Principal Advisor, Prabhudas Lilladher Pvt Ltd said that the country and the market infrastructure have improved significantly due to positive structural changes in the economy.
Kasat said FIIs may have a mixed view on leaving or entering India as the Fed is losing its credibility and India has been able to maintain inflation and interest rates better than many others.
Stability in rupee, positive volatility in dollar index and bond yields are key to support FPI inflows. dollars, which at . was is 82.79 at the end of October 81.91 now.
Joseph Thomas, Head of Research, Emkay Wealth Management, said certainty on the rate trajectory and stability in exchange rates is needed to bring foreign investors back into the markets.