Foreign portfolio investors (FPI) pumped in Rs 54,980 crore in Indian markets in December so far amidst availability of excess liquidity in global markets and expectation of fresh stimulus package by various central banks, among others.
As per the depositories' data, FPIs invested a net Rs 48,858 crore into equities and Rs 6,122 crore into debt segment between December 1 and 18.
This took the total net investment to Rs 54,980 crore during the period under review. In November, the total net investment of FPIs stood at Rs 62,951 crore.
Himanshu Srivastava, associate director - manager research, Morningstar India said, "availability of excess liquidity in global markets and low interest rates diverted foreign flows into emerging markets like India." Moreover, expectation of fresh stimulus package by various central banks globally to revive economic growth lifted risk appetite among investors and weakened dollar further which typically augurs well for emerging markets. Also, there is expectation that a COVID-19 vaccine will potentially drive further growth in emerging markets like India, he added.
"After months of buying a few select stocks, FPIs are beginning to broaden their horizon as buying in small and mid cap space has increased," Harsh Jain, co-founder and COO at Groww noted. He added that there is an impression that printing of money in the US might continue and hence, there will be even more money in the quarters to come. "Which is why many FPIs are aggressively purchasing in India fearing that the valuations will go even higher from here," Jain said.
Going forward, on the domestic front, the focus of FPIs would continue to be on the active COVID-19 case count coming further down and the economic getting back on growth trajectory, Srivastava said. There has been improvement in the macro-economic environment which has so far ensured that FPI flows remain intact.
Besides, continuation of accommodative stance by global central banks may ensure flow of foreign investments into emerging markets, including India, he added.