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After withdrawing over ₹7,600 crore last month, foreign investors have resumed buying Indian stocks and have invested more than ₹2,400 crore in the domestic equity markets in the first week of October. FPI flow is expected to remain volatile in the coming months on a slew of global and domestic factors, experts said.
"The fall in job openings in the US and lower-than-expected rate hike by the Australian central bank imbibed hope among investors that global rates may peak soon. However, till then it seems FPI flows will remain volatile in the coming months," said Shrikant Chouhan, Head-Equity Research (Retail) at Kotak Securities.
According to data from the depositories, foreign portfolio investors (FPIs) invested a net ₹2,440 crore in equities during October 3-7, after pulling out over ₹7,600 crore in September, on the hawkish stance by the US Federal Reserve and sharp depreciation in rupee.
Prior to this, FPIs made a net investment of ₹51,200 crore in August and nearly ₹5,000 crore in July. Before July, foreign investors were net sellers in Indian equities for nine months in a row from October last year.
FPIs have turned marginal buyers in early October but there is no consistency in their activity, said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services. They will turn sustained buyers only when the dollar peaks and shows a sustained downtrend, he added.
Acceleration in growth
"With the pick-up in government expenditure on the back of higher GST and direct tax collections, growth is expected to accelerate. This has led to a positive stance by FPIs on Indian markets," said Anita Gandhi, Whole Time Director and Head, Institutional Business at Arihant Capital. However, rising global yields need to be closely watched, she added.
So far this year, foreign investors have withdrawn ₹1.66-lakh crore from Indian equities, data showed. Net withdrawals in 2022 have largely been affected by movements in currency and interest rates, and long-term opportunity may continue to attract FPI flows to Indian markets, Abhishek Dev, co-founder and CEO of Epsilon Money Mart, said.
On the other hand, foreign investors have pulled out ₹2,950 crore from the debt market during the period under review. Apart from India, FPI flows were positive for Taiwan, Indonesia, South Korea and Thailand during this period.
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