Despite stock market volatility amid geo-political uncertainties, foreign institutional investors (FIIs) remained net investors in India so far this year, as the country’s economy showed tremendous resilience, market watchers said .
For 2024 (till December 27), FIIs sold equity for Rs 119,277 crore through the exchanges. In contrast to this selling trend, they invested Rs 120,932 crore through the primary market, said experts, citing data from the National Securities Depository Limited (NSDL).
“This means FIIs are net investors in India so far this year. The selling through exchanges is mainly due to the high valuations and investing through the primary market is mainly due to the fair valuations,” said Dr V.K. Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
The selling spree by FIIs seen in October and November declined in December. There has been occasional buying by FIIs in early December but they turned sellers again, though not on a sustained basis like in October and November.
“An important characteristic about FII investment is that they have been consistent investors of equity through the primary market. In December through 27th, FIIs invested Rs 17,331 crore through the primary market,” said Kumar.
This trend of selling through the exchanges and buying through the primary market is discernible in the year-long trend in 2024. In the debt market, FIIs have invested Rs 112,409 crores so far this year, as per the NSDL data.
According to market experts, FIIs may again turn sellers into equity in early 2025 since the dollar has been appreciating (dollar index is above 108) and the US 10-year bond yields are attractive at around 4.4 per cent.
“FIIs will turn buyers in India when there are indications of growth and earnings recovery,” they added. Manoj Purohit, Partner and Leader, Financial Services Tax, Tax and Regulatory Services, BDO India, said that after a couple of months of continuing hefty burnouts, the capital markets witnessed a comeback from the foreign fraternity this month.
The feather in the cap is the record-breaking investments via the FDI route thereby crossing the $1 trillion mark. “The return of foreign participants to India market can be attributed to various factors. Primarily, on the macro front, the recent policy announcements in the US impacting the peer countries, settling geopolitical situation among Middle East countries, the well-controlled inflation, and interest rate check,” Purohit explained.
