FPIs invest ₹19,675cr in Indian equities this February
What's the story
Foreign Portfolio Investors (FPIs) have made a strong comeback in early February, investing ₹19,675 crore into Indian equities in the first half of the month. The surge comes after three months of heavy selling by FPIs. In January alone, they had pulled out ₹35,962 crore from Indian equities. The recent investments are attributed to easing global macro concerns and the US-India trade deal.
Market dynamics
Easing global macro concerns driving FPI inflows
Himanshu Srivastava, the Principal Manager - Research at Morningstar Investment Research India, said the recent buying was driven by easing global macro concerns. He specifically pointed to softer US inflation data that has positively impacted the interest rate cycle and stabilized bond yields and the US dollar. This has improved risk appetite for emerging markets like India.
Economic indicators
Domestic factors also at play
Along with global factors, domestic economic indicators have also contributed to the recent FPI inflows. Stable inflation and corporate earnings broadly in line with expectations have reinforced confidence in India's growth outlook. Vaqarjaved Khan, Senior Fundamental Analyst at Angel One, said these inflows were triggered by the US-India trade deal and a supportive Union Budget with fiscal stimulus measures.
Market activity
FPI activity in February so far
In the first half of February, FPIs were net buyers in seven out of 11 trading sessions. However, they turned sellers on four occasions. The overall figure was skewed by a sharp sell-off of ₹7,395 crore on February 13 when the Nifty fell by 336 points. This was mostly due to heavy selling in IT stocks amid the so-called "Anthropic shock."