Foreign portfolio investors (FPIs) reversed the three-month selling streak in January by investing net Rs 3,117 crore in Indian markets, so far this month. Depositories data showed that they pumped Rs 1,857 crore into equities and Rs 1,743 crore into hybrid instruments during January 1-14. At the same time, they pulled out Rs 482 crore from the debt segment, taking the total net inflow to Rs 3,117 crore. Prior to this, overseas investors were net sellers in the Indian markets for three consecutive months since October 2021.
“IT stocks have boomed in Jan after the good results of IT majors. This is likely to be repeated in the case of financials too,” noted VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services. As per Himanshu Srivastava, associate director – manager research, Morningstar India, FPIs have currently adopted cautious stance towards Indian equities. With Union Budget around the corner, FPIs would like to get more clarity and direction from the government about its roadmap towards economic growth before investing substantially in the country’s capital markets.
For the debt segment, Srivastava said FPIs haven’t been investing significantly in Indian debt markets for a long time now and that trend continues. About other emerging markets, Shrikant Chouhan, head- equity research (retail), Kotak Securities said FPI flows were positive across the emerging markets except for the Philippines which witnessed an outflow of USD 4 million. Taiwan, South Korea, Thailand and Indonesia saw inflow of USD 1,793 million, USD 1,528 million, USD 445 million and USD 322 million, respectively.
“Amidst sharp increase in Omicron cases, elevated inflation and expectations of rate hike by the U.S, FPI flows in the emerging markets are expected to remain volatile,” said Chouhan. As far as Indian market is concerned, upcoming Union Budget and earnings season would be the key things to monitor, he added.