Foreign investors pour ₹46,000cr into Indian equities in one week
What's the story
Foreign institutional investors (FIIs) have made a massive investment in Indian equities, pouring in a net amount of ₹45,960 crore over the last week. The development comes as a major reversal from the October trend when foreign investors had pulled out ₹45,162 crore from the Indian market. The sudden surge in investments has led to one of the strongest weekly rallies for benchmark indices.
Market dynamics
FII-DII divergence
The recent data indicates a shift in market leadership, with FIIs emerging as net buyers in all five trading sessions of the week.
This marks their second consecutive week of buying after a 10-week selling spree.
On the other hand, domestic institutional investors (DIIs) have turned net sellers for the first time in 12 weeks, offloading shares worth ₹24,197 crore amid profit booking following the sharp market recovery.
Investment trends
Massive FII inflows
The intensity of foreign buying was particularly high toward the end of the week, with overseas investors pumping a net ₹28,724 crore into Indian equities on Thursday and Friday.
Meanwhile, DIIs sold shares worth ₹16,413 crore during this period.
On November 6 alone, FIIs invested a net ₹13,750 crore in domestic equities after a massive purchase of ₹14,975 crore on November 5, the largest single-day FII investment in Indian equities in over a year.
Profit booking
DII selling continues
Despite the aggressive foreign buying, DIIs sold equities worth a net ₹5,969 crore on Friday after net sales of ₹10,445 crore in the previous session. Their combined selling over these two sessions stood at ₹16,414 crore.
For the week as a whole, DII selling reached ₹24,197 crore, ending an 11-week buying streak.
The renewed interest in Indian equities comes amid improving domestic earnings prospects and easing geopolitical concerns.
Market appeal
Factors driving FPI interest
The shift in the global investment landscape has made Indian equities more appealing to foreign investors.
This is mainly due to improving domestic earnings prospects, relatively attractive valuations, and easing geopolitical concerns.
V K Vijayakumar, Chief Investment Strategist at Geojit Investments, said that the correction in AI-related stocks has made India more attractive to FPIs.
He also noted impressive earnings growth in India and attractive large-cap valuations as factors making India a favored investment destination.
Benchmark indices
Benchmark indices surge over 8% during the week
The return of foreign capital has coincided with a sharp rally in domestic benchmark indices, with both the Nifty and Sensex gaining over 8.5% during the week.
The Nifty surged 1,977 points or 8.57% to close at 25,030 on Friday, while the Sensex climbed 6,568 points or 8.82% to settle at 81,028, one of their strongest weekly performances yet.
The rally was supported by renewed FII inflows and strong domestic earnings, among other factors.