FPIs Return To Indian Equities With Rs 22,766 Crore Inflows In December

Foreign Portfolio Investors (FPIs) invested a net Rs 22,766 crore in Indian equities in the first two weeks of December. This marks a strong revival after record outflows in the preceding months. FPIs had pulled out Rs 21,612 crore in November and Rs 94,017 crore in October, the highest monthly outflow on record.

In contrast, September had seen a nine-month high with Rs 57,724 crore of net inflows, highlighting the volatility in FPI trends. As of December 13, FPI investments in 2024 stand at Rs 7,747 crore, according to depository data.

Rate Cut Expectations Drive Inflows

The expectation of a US Federal Reserve rate cut fueled this month’s FPI inflows. Lower rates have improved global liquidity, attracting capital to emerging markets like India, said Karthick Jonagadla, Founder of Quantace Research.

Domestic factors also supported sentiment. The Reserve Bank of India (RBI) boosted liquidity by reducing the Cash Reserve Ratio (CRR). Meanwhile, India’s Consumer Price Index (CPI) inflation dropped to 5.48% in November, raising hopes for further monetary easing, noted Vipul Bhowar, Senior Director at Waterfield Advisors.

Cautious Optimism Despite High Valuations

Despite recent buying, FPIs have sold on some trading days. High Indian valuations and a rising dollar could prompt further selling, warned V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

On the debt side, FPIs invested Rs 4,814 crore in the general limit but withdrew Rs 666 crore from the Voluntary Retention Route (VRR) in December. So far in 2024, FPIs have invested Rs 1.1 lakh crore in Indian debt markets, showing sustained interest across segments.

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