Foreign Portfolio Investors (FPI) retained their buying interest in Indian equities in the second week of December, albeit in select counters, pumping net inflows of ₹ 22,765 crore so far this month, depositories data showed.
This strong inflows has provided the much needed momentum to the Indian secondary market, driving equity benchmarks higher last week. The latest inflows included net investments of ₹ 14435 crores through stock exchanges till December 13.
This latest reading of net FPI inflows was in sharp contrast to their net outflows of ₹ 21,612 crore in November 2024 and massive net withdrawal of ₹ 94,017 crore recorded in October 2024. In September, FPIs had bought Indian equities worth ₹57,724 crore.
While FPIs had been heavy sellers of Indian equities in previous two months, they have been big investors in the primary markets, injecting over ₹ 1.10 lakh crore this calendar year.
Meanwhile, net FPI investments into Indian equities this calendar year stood at ₹ 7,747 crore, depositories data showed. If this positive buying interest were to continue till December 31, this may be the second consecutive year when FPIs would be net buyers of Indian equities, say capital market observers.
V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services “FPIs turning buyers in December after relentless selling in October and November has contributed to the recovery in the market from the November lows. FPI buying has triggered a rally in largecaps particularly in banking and IT”.
Large sellers
Even though FPIs have turned buyers in December, they have been large sellers,too, on certain days, he said. “This indicates that at higher levels, they may again turn sellers since Indian valuations continue to be relatively high compared to other markets. Rising dollar is another concern which might prompt FIIs to sell at higher levels”, Vijayakumar added.
Vipul Bhowar, Senior Director – Listed Investments, Waterfield Advisors, said that the recent rally in the Indian equity market has been driven by positive political developments, a recovery in corporate stocks, increased foreign investments – both in primary and secondary markets and broad sector participation.
“Historical data shows that the Nifty index has closed higher in 71 percent of Decembers since 2000, with significant gains noted in 2023 and 2020”, he added.
He said that favourable conditions and positive investor sentiment have supported recent market movements. However, the outlook for 2025 indicates a cautious optimism in light of potential challenges, Bhowar noted.