Foreign portfolio investors (FPI) have remained net buyers to the tune of Rs 14,649 crore in Indian markets in January, amid availability of global liquidity and emerging markets being a preferred destination for foreign funds.
According to FPI statistics available with depositories, overseas investors pumped in a net of Rs 19,473 crore into equities but pulled out Rs 4,824 crore from the debt segment between January 1 and January 29.
The total net investment in January stood at Rs 14,649 crore.
Morningstar India Associate Director (Manager Research) Himanshu Srivastava said, "Excess liquidity in the global financial markets with central banks and governments worldwide announcing stimulus measures to support their dwindling economies, made its way into the emerging markets with India too benefitting from this trend."
Geojit Financial Services Chief Investment Strategist V K Vijayakumar said that due to uncertainty regarding the budget proposals, FPIs have been a bit apprehensive about the direction of the market going ahead and, therefore, they have seen selling in the past few days.
He further noted that India has been one of the highest recipients of FPI funds among emerging markets in November and December which played a significant role in pushing the Sensex to record 50,000 levels.
"Given the uncertainty surrounding the Budget, FPIs would have preferred to book some profit at these levels," Srivastava said.
Giving an overview of emerging markets, Kotak Securities Executive Vice-President and Head (Fundamental Research) Rusmik Oza said that except for India and few more countries, most emerging markets are witnessing FPI selling in a big way.
"Countries like South Korea and Taiwan have seen month-to-date FPI outflows of $5.3 billion and $3.4 billion, respectively," Oza said.
Countries like India and some of the oil-producing nations can still expect positive FPI flows in the medium term, he further added.
On current selling by FPIs, Groww co-founder and Chief Operating Officer Harsh Jain said said "such movements happen from time to time".
He added that in the longer term, India continues to remain an attractive destination for investment among emerging market. It has been validated by the FPI inflows into the country in 2020, a year when nearly all other emerging markets saw only outflows, Jain said.
On the domestic front, the focus is on the Union Budget
and the measures that the government announces to accelerate the economic growth in the country, Srivastava said.