FPIs invested Rs 44,378 crore in equities and Rs 5,175 crore in the debt segment, taking the total net investment to Rs 49,553 crore between November 3-20.
In October, FPIs invested a net sum of Rs 22,033 crore.
According to Harsh Jain, co-founder and COO at Groww, high liquidity coupled with improving global economic indicators and clarity about the US presidential elections are driving the FPI investment.
In addition, “with global trade improving and economies world over showing green shoots, investors are becoming more comfortable in investing in emerging markets like India,” he added.
Echoing the views, Rusmik Oza, executive VP-head of fundamental research-PCG, Kotak Securities Ltd, said the flows accelerated after the US election results as investors globally expect the dollar to weaken further in future.
“It is expected that the Federal Reserve and other Central Banks like ECB and BoE would have to take more monetary measures to combat the second wave of COVID. This would lead to more liquidity infusion into global markets,” Oza added.
Making a comparison between other emerging markets, Rusmik Oza said FPI flows in South Korea and Taiwan are closer to what India has received.
“Interestingly, China after seeing very strong flows in the previous two months saw net outflows of USD 16.5 billion this month to date,” Oza added.
Regarding future of FPI flows, he said expectations of a weaker dollar and high liquidity are likely to bring more inflows into emerging markets and India is one of the preferred markets in this space.
Factors like higher than expected jump in earnings, faster recovery on the ground and stable currency in India are also helping FPI inflows.
FPIs have been net buyers in the Indian equity markets on almost all trading sessions barring a few in November, noted Himanshu Srivastava, associate director – manager research, Morningstar India.
Going forward, Srivastava said, on the domestic front, the biggest challenge will be to bring COVID cases further down, handle the expected second wave of infections effectively and get the economy back on the growth trajectory. There has been improvement in the macroeconomic scenario which has so far ensured that FPI flow remain intact.
Globally, worries about rising coronavirus infections in several parts of Europe and the US could turn investors risk averse if the situation deteriorates. That said, continuation of accommodative stance by global central banks may ensure flow of foreign investments into emerging markets, including India, Srivastava further said.