Foreign investors significantly returned to Indian equities in the first week of November after withdrawing money over the previous two months, injecting Rs 15,280 crore on the anticipation that the US Federal Reserve will scale down rate increases. According to Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities, foreign portfolio investor (FPI) flows are anticipated to remain erratic in the foreseeable future given the effects of monetary tightening and geopolitical concerns, among other things.

Data from depositories show that during the period of November 1–4, FPIs invested Rs 15,280 crore in stocks. This occurred after net outflows of only Rs 8 crore in September and Rs 7,624 crore in August.

FPIs had been net buyers up to this point, spending roughly 5,000 crore in July and 51,200 crore in August. Prior to that, beginning in October of last year, foreign investors were net sellers of Indian stocks for a nine-month period.

FPIs have sold a total of Rs 1.53 lakh crore worth of stocks so far this year.

FPIs started out October as sellers, but the sell-off quickly moderated due to some recovery in market sentiment worldwide.

Additionally, foreign investors made investments in the current month with the anticipation that the aggressive rate hiking cycle was coming to an end. Himanshu Srivastava, Associate Director – Manager Research, Morningstar India, added that some macroeconomic statistics in the US turned out to be better than anticipated, indicating a decreased possibility of any immediate negative impact on the US economy.

“Strong FPI flows in Indian markets during the first week of November were driven by expectations that the US Fed will announce its FOMC (Federal Open Market Committee) meeting on November 2nd with a more dovish tone than previously seen following another 75 basis point rate hike. As a result, there is now a risk to the environment internationally, which has increased FPI flows to India “Sanctum Wealth’s Manish Jeloka, Co-Head of Products & Solutions, said.

It’s significant that FPIs are purchasing in India despite rising US bond yields and the value of the US currency. According to V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services NSE -0.11%, this reflects FPIs’ trust in the Indian economy, particularly at a time when the global economy is slowing down.

Due to its local consumer demand, India is marginally better off than other countries during the global recession. The Diwali holiday season also brought some joy.

Strong GST receipts and an uptick in recent PMI data may have contributed to the rise in FPI inflows, which the RBI is closely watching. Anita Gandhi, a full-time director and the company’s head of institutional business, stated.

She mentioned that topics to be actively studied include the ongoing results season, oil prices, and dollar movements.

“Capital flight from China, which is afflicted by substantial economic problems and considerable political unrest, is a significant future trend that is quite likely. India is the emerging economy most suited to draw capital away from China. Consequently, the trend of FPI purchases is expected to continue, “said Vijayakumar.

On the other side, during the time period under review, foreign investors withdrew Rs 2,410 crore from the debt market.

Aside from India, this month’s FPI flows have been favourable for South Korea, Thailand, and the Philippines.