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September marked the comeback of the foreign portfolio investors (FPIs). Data show that last month, FPIs made the largest purchase of stocks and debt instruments in 2021 so far at ₹27,756 crore.
Nearly 30 per cent of FPI investments into stocks and debt instruments during 2021 so far came in September, data on the website of demat account provider NSDL shows.
The FPIs net purchased equities for ₹13,154 crore and debt instruments worth ₹12,804 crore in September. So far this year, FPIs have net purchased stocks and debt instruments worth ₹93,056 crore. The last big monthly investment of FPIs in 2021 was before the Covid second wave of the pandemic, in February, when they purchased stocks and debt worth ₹24,000 crore.
Markets on a high
Indian stock markets have gained nearly 50 per cent in terms of index value for Sensex and Nifty since the crash of March 2020. But contrary to the popular perception of the past two decades, the market rally in the past two years has been mainly driven by domestic inflows into stock markets led by retail and high net worth individuals. In just the past three months, the Nifty and Sensex have managed to gain nearly 15 percent. Sensex touched the 60,000 mark while Nifty came close to 18,000.
More buying ahead
“FPIs have been under constant fear of the US Federal Reserve starting a taper. But any significant taper of the US bond-buying programme seems a distant reality. FPI money is yet to pour into a large number of small- and mid-cap stocks. In the coming months, as FPIs step up buying into Indian markets, they will also start looking for hidden gems instead of plain index buying. The government seems to be stepping on the gas on its divestment programme and that will keep markets buoyant for the next two years,” said Kishor Ostwal, MD, CNI Global Research.
While neither retail nor domestic investment into Indian markets is showing any signs of fatigue, impetus in FPI fund flows could lead the markets to scale many new psychological peaks, analysts say. They are of the view that FPIs, which have often been the bulwark of Indian markets, have chosen to tread a cautious path by not going overboard with their investments since 2019 when their total investments had crossed ₹1.35-lakh crore. In 2020, that annual investment dropped to ₹1.03-lakh crore.
During the last decade, FPI investment was at its peak in 2015 when it reached the annual figure of ₹2.56-lakh crore. But even though the markets are trading at record high levels, FPI investments have only managed to cross the ₹1 -lakh crore market this year, analysts say.
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