According to the custodians, between December 1 and 18, the FPIs net invested Rs 48,858 billion in stocks and Rs 6,122 billion in debt.
The total net investment during the reporting period was thus 54,980 billion rupees.
In November, the FPIs’ total net investment was Rs.62,951 billion.
Himanshu Srivastava, Associate Director – Research Manager at Morningstar India, said, “The availability of excess liquidity in world markets and low interest rates have diverted foreign flows to emerging markets such as India.”
In addition, the expectation of a new stimulus package from various central banks around the world to revive economic growth has increased investor risk appetite and further weakened the dollar, which is usually good for emerging markets.
There is also an expectation that a COVID-19 vaccine may lead to further growth in emerging economies like India, he added.
“After months of buying a few select stocks, FPIs are gradually broadening their horizons as small and mid-cap buying has increased,” noted Harsh Jain, co-founder and COO at Groww.
He added that there is a sense that money printing could continue in the US and therefore more money will be available in the coming quarters.
“This is why many FPIs in India are aggressively buying FPIs, fearing that valuations will continue to rise from here,” Jain said.
Domestically, the FPIs would continue to focus on the active COVID-19 case number, which continues to go down, and on the economic return to growth, Srivastava said.
The macro environment has improved which has so far ensured that FPI flows remain intact.
Also, the continuation of the accommodative stance of global central banks could ensure the influx of foreign investment into emerging economies, including India, he added.