By Vineet Kumar 
FPIs Stage Strong Comeback with ₹24,454 Crore Inflows in December’s First Week
Foreign Portfolio Investors (FPIs) have made a notable return to Indian equities, infusing a net ₹24,454 crore in just the first week of December 2024. This marks a significant reversal from the heavy outflows witnessed in previous months. FPIs had pulled out ₹21,612 crore in November and a record-breaking ₹94,017 crore in October, which remains the worst monthly outflow ever recorded.
Stabilizing Global Conditions Boost FPI Confidence
The resurgence in FPI investments can be attributed to stabilizing global economic conditions and the growing anticipation of potential rate cuts by the US Federal Reserve. Trivesh D, COO of Tradejini, remarked that the improving global macroeconomic environment, coupled with a recent market correction, likely encouraged FPIs to re-enter the Indian markets.
According to data from depositories, FPI investments have reached ₹9,435 crore in 2024 so far. September had been a standout month for inflows, with FPIs pumping in a nine-month high of ₹57,724 crore, showcasing the volatility in investment patterns.
Sectoral Preferences and Strategic Shifts
FPIs have shown particular interest in sectors like IT and banking. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, highlighted that while FPIs have been offloading large-cap banking stocks recently, this segment remains fairly valued and offers considerable upside potential. The IT sector, with its promising growth trajectory, is also poised to attract sustained foreign investor interest.
On the flip side, FPIs pulled out ₹142 crore from the debt general limit but invested ₹355 crore in the debt Voluntary Retention Route (VRR) during the same period. Interestingly, FPIs have infused ₹1.07 lakh crore into the debt market so far this year.
Factors Influencing Future FPI Flows
Looking ahead, the flow of foreign investments into Indian equities will depend on multiple factors. These include:
Global interest rate trends: Any easing by the US Federal Reserve could further enhance FPI inflows.
Geopolitical developments: Uncertainty around Chinese equities, fueled by tariff proposals from the US President-elect, could drive FPIs toward Indian markets.
India’s economic performance: Robust GDP growth and strong Q3 earnings could bolster investor confidence.
Sectoral growth prospects: Banking and IT sectors remain under the spotlight for potential FPI inflows.
Himanshu Srivastava, Associate Director of Manager Research at Morningstar India, added that despite relatively high valuations, Indian equities offer long-term growth clarity, which makes them attractive to foreign investors.
Conclusion
The ₹24,454 crore inflows in December reflect renewed FPI confidence in Indian markets amid improving global conditions. While challenges like geopolitical tensions and high valuations persist, India’s economic resilience and promising sectoral opportunities are likely to sustain foreign interest in the coming months.
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