FPIs made purchases worth $15bn in Indian equities this fortnight
In the first half of December, foreign portfolio investors (FPI) made purchases in Indian equities worth Rs. 42,733 crore, National Securities Depository data showed. This makes the highest-ever purchases by FIIs in a fortnight. This surge is attributed to factors such as lower US bond yields, the Reserve Bank of India's (RBI) increased growth forecast for India, and state election results suggesting policy continuity in 2024.
FPI inflows on course for highest fiscal year since 2021
During the first two weeks of December, Nifty50 and Sensex each saw a 6.6% gain, making it their best month since July 2022. By December 15, FPI inflows hit Rs. 1.74 lakh crore for FY 2024, possibly the highest since 2021. Avinash Gorakshakar of Profitmart Securities explained that "once you have a large amount of foreign inflows like what we have seen in the first half of December, that is going to trigger a rise in domestic equities."
India's economic outlook is robust
It's worth noting that FPIs had sold (net) Indian shares in fiscal years 2022 and 2023. However, the recent surge in foreign investment demonstrates renewed confidence in India's economic growth and stability. With a strong outlook for the future, this trend will likely continue to positively impact India's financial markets. Jefferies analysts stated, "India's economic outlook is robust with close to 7% multi-year GDP growth likely," and they predict a 15% earnings growth for Nifty50-listed companies in fiscal 2025.
