Foreign portfolio investors (FPI) have pumped in a net Rs 60,094 crore into Indian markets in December so far amidst optimism in the global markets. According to the depositories data, FPIs invested a net Rs 56,643 crore into equities and Rs 3,451 crore into debt instruments between December 1-24. The total net investment during the period under review stood at Rs 60,094 crore.
In November, the total net investment of FPIs stood at Rs 62,951 crore. FPI inflows were boosted post the US election result, Vinod Nair, head of research at Geojit Financial Services commented.
"New investments were placed on-hold ahead the event risk, this positive outcome triggered optimism in the global equity market, in anticipation of ease in trade policy," he said. India received a decent size of the benefit having developed an edge over other emerging markets (EMs) due to several reforms.
"Tax reforms, containment of COVID-19, new measures announced (like PLI, NPA measures, guarantee to MSME) and strong pharma capabilities helped to overwhelm other EMs," Nair said. In addition, Indian rupee is leaping against the USD as a stable currency compared to other Asian peers in the last eight months.
India is outperforming other emerging market in terms of year-to-date return, excluding China, Nair noted. "The valuation is also at peak and premium level, about 50 per cent higher compared to peers," he said.
The preference of FPIs has been new businesses like IT, stable outlook companies and sectors like Pharma, Chemical and FMCG, he added. Going forward, Nair said, the trend of FPI inflow can slowdown in the short term due to rise in global volatility and due to overview of investment strategy plan for 2021 given premium valuation limiting upsides in the short term.