Foreign Investors Make Comeback, Buy ₹23,000 Crore Indian Shares in 5 Days
In a significant turnaround, foreign institutional investors (FIIs) have returned to Indian equities and purchased domestic shares worth ₹23,000 crore in the last five trading sessions ending March 25. This comeback coincides with a seven-day winning streak for Indian indices, which have been buoyed by easing valuations after the recent correction, a stronger rupee, cooling inflation, and improving macroeconomic conditions.
According to data from the National Stock Exchange (NSE), FIIs have been net buyers in the Indian market for the past five days, purchasing shares worth ₹23,000 crore. This is a stark contrast to their previous selling spree, which had seen them offload shares worth over ₹1 lakh crore in the preceding months.
The comeback of FIIs is a significant development, as it indicates a renewed confidence in the Indian economy and its stock markets. FIIs have historically played a crucial role in shaping the trajectory of Indian equities, and their participation is seen as a key indicator of market sentiment.
The data suggests that FIIs have been buying into various sectors, including technology, financials, and consumer goods. The top losers in the FII selling spree had been these very sectors, which had seen significant selling pressure in the preceding months. The turnaround in FII sentiment is likely to have a positive impact on these sectors, driving up prices and attracting more investors.
The turnaround in FII sentiment can be attributed to several factors. One of the primary reasons is the easing of valuations after the recent correction. The sharp correction in Indian equities had led to a significant drop in valuations, making them more attractive to FIIs. Additionally, the strengthening of the rupee against the US dollar has made it more attractive for FIIs to invest in Indian equities.
Another factor contributing to the turnaround is the cooling of inflation. The recent decline in inflation rates has reduced the pressure on the Reserve Bank of India (RBI) to raise interest rates, which had been a major concern for FIIs. The cooling of inflation has also reduced the risk of an economic slowdown, making it more attractive for FIIs to invest in Indian equities.
Furthermore, the improving macroeconomic conditions have also contributed to the turnaround. The Indian economy has been showing signs of recovery, with GDP growth rates picking up pace. The government’s efforts to boost infrastructure spending and reduce fiscal deficits have also helped to improve investor sentiment.
The comeback of FIIs is likely to have a positive impact on the Indian market. FIIs are known to bring in fresh capital and drive up prices, which can lead to a virtuous cycle of growth and development. The turnaround in FII sentiment is likely to attract more investors to the Indian market, leading to a further increase in prices and a broadening of the market.
In conclusion, the comeback of FIIs is a significant development that indicates a renewed confidence in the Indian economy and its stock markets. The easing of valuations, strengthening of the rupee, cooling of inflation, and improving macroeconomic conditions have all contributed to the turnaround. The comeback of FIIs is likely to have a positive impact on the Indian market, driving up prices and attracting more investors.
