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Record Rs 65,317 crore monthly FII inflow in November drives rally across segments

Coming to the positive mood, this November inflow has taken the total year-to-date FII inflow to over Rs 1 lakh crore, at Rs 1,07,562.09 crore.

November 28, 2020 / 10:16 AM IST

Foreign investors net bought Rs 65,317.13 crore worth of Indian equities in November, the highest-ever inflow in a single month.

The inflow in November has taken the total year-to-date FII inflow to Rs 1,07,562.09 crore, which was much higher than Rs 82,741.32 crore inflow seen in the same period the previous year.

FII money boosted the sentiment and provided strong support to the Indian equities, because every fall in the past (especially after March crash) was bought which gradually pushed each segment of the market higher.

All the credit goes to the improving economic data points, which we already have seen in September quarter GDP (at -7.5 percent against record 23.9 percent decline in June quarter, 2020), better-than-expected September quarter earnings and government's initiatives to revive the economy through 'Atmanirbhar Bharat'.

The inflow increased considerably after US elections wherein Democratic Party's Joe Biden became president-elect, which cleared the uncertainty over the ruling of US government.

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"The FIIs have been pumping in money into the emerging markets ever since they got clarity over the US election outcome. This has led to strong inflows into Indian markets as well. Going ahead, the intensity of inflows in India would depend on several factors such as policy changes in the US and earnings growth in India. Having said that, we believe emerging markets like India would remain a preferred choice for FIIs," Ajit Mishra, VP, Research at Religare Broking told Moneycontrol.

The most important point to note here is India has seen less of an impact form COVID-19 compared to the United States and European nations which badly hit by the second wave. Three vaccine candidates - Pfizer, Moderna and Astra Zeneca - also showed strong results which strongly indicated that global growth engine may revive in coming quarters, experts feel.

"News of emergency approval for vaccines and the 90-95 percent success in trials from three different companies: Pfizer, Moderna and Astra Zeneca, could prove to be an upside risk," Ritu Arora, CEO & CIO Asia at Allianz Investment Management said.

All in all FII-led rally has seen across sectors and segments. The benchmark indices hit record highs in November with the Nifty50 crossing 13,000 mark and Sensex above 44,000 levels, rising more than 70 percent from March 23's low and gaining 11 percent in November alone.

The broader markets outperformed benchmark indices as the Nifty Midcap index was up 15.5 percent and Smallcap 13 percent in passing month. The rally was driven by banking & financials, metals and auto stocks as Nifty Bank and Metal gained 24 percent and 25 percent in November.

Even the crude oil prices also broke the rangebound trade and closed at $48 a barrel on the Brent futures, the highest level since early March this year, amid hope that the vaccine may help global growth engine run.
Sunil Shankar Matkar
first published: Nov 28, 2020 10:16 am

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