Robust macros, bullish market drive FPIs to park Rs 8,147 cr in Indian equities on Nov 30

FII's remained buyers in the local equity markets for the fourth straight session with buying around $1.2 billion

With an infusion of Rs 8,147.85 crore on November 30 alone, foreign investors continued to be net buyers of Indian equities for the fifth straight session, showed provisional data from the National Stock Exchange. The foreign portfolio investors (FPIs) bought stocks worth around $1.2 billion in the last four sessions, the NSDL data showed.

Analysts believe the significant buying on November 30 was triggered by several factors, including a $1-billion inflow from foreign institutional investors (FIIs) during MSCI rebalancing. Additionally, foreign investors stepped up their long-term positions based on India's robust macroeconomic fundamentals. Optimism surged further on positive exit polls and the second-quarter GDP number.

Traders noted increased interest from FIIs in Tata Technologies, which made a bumper listing on the day of monthly expiry, as some didn't receive IPO allotments. Few traders noted some FIIs building positions in defence stocks after the Defence Acquisition Council's approval of procurement for the Air Force and the Army, including light combat helicopters (LCH) and light combat aircraft (LCA) MK-1A.

After its recent rebalancing on November 30, the MSCI Global Standard Index adjusted with the inclusion of nine Indian stocks such as IndusInd Bank, Suzlon Energy, Persistent Systems, and Paytm parent One97 Communications earlier this month. Fresh additions to the index were APL Apollo, Polycab, Macrotech Developers, Tata Motors, and Tata Communications. And, there was no exclusion. The inclusion is likely to pave way for a passive inflow of nearly $1.5 billion, according to calculations by Nuvama Alternative & Quantitative Research.

Traders cited declining US bond yields and a weaker dollar amid reduced geopolitical tension as reasons behind the increased FII interest in Indian equities. On the policy front, whispers are getting louder that the US Federal Reserve may soon start reversing the rate hikes. The anticipation aided the overall bullish sentiment, while an upgrade on India by several brokerages have also sparked increased interest from foreign investors.

The robustness in the market has been bolstered by active participation from the broader segments. Small and mid-cap stocks outperformed their larger peers in the current rebound, while strong domestic flows brought stability in the market amid raging volatility in markets abroad. Immediate short-term risks to the market seem minimal. Sustained sharp declines in crude oil could positively impact the markets. Analysts remain optimistic about India's long-term economic and market prospects, expecting further milestones ahead.

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