Foreign portfolio investors pumped ₹48,263 crore into Indian equities between November 2 and November 6. This buying spree marks a sharp turnaround after months of heavy selling. Manishi Raychaudhuri said, "We are seeing signs of FII flows returning to emerging markets." Blue-chip stocks led this rally, boosting overall market sentiment significantly.
Foreign investors have stepped up buying in Indian equities, pumping in over ₹48,000 crore in five sessions as frontline stocks rally and overseas flows show signs of a turnaround.
Foreign portfolio investors (FPIs) are showing renewed appetite for Indian equities, pumping in nearly ₹48,263 crore over five consecutive trading sessions between November 2 and November 6, in a sharp turnaround after months of sustained selling.
Overseas investors were net buyers of equities worth ₹13,749.82 crore on Friday, according to provisional exchange data. This followed purchases of ₹16,277.99 crore on Thursday, taking buying across the two sessions to more than ₹30,000 crore.
FPIs also bought shares worth ₹7,830.40 crore on Wednesday, ₹7,052.74 crore on Tuesday and ₹3,352.12 crore on Monday.
The latest buying spree comes after foreign investors withdrew billions of dollars from Indian equities over the past two years. FPIs sold shares worth $4.1 billion in September, followed by outflows of $2.2 billion in October.
The shift in sentiment is also reflected in the frequency of their purchases. Over the past 15 sessions, overseas investors have been net sellers in just three sessions, with cumulative selling on those days limited to around $230 million.
Why are FPIs returning to Indian equities?
Historically, overseas investors have preferred large, liquid frontline stocks over mid- and small-cap companies. Their latest buying activity appears to be following a similar pattern, with blue-chip stocks leading the broader market rally.
"We are seeing signs of FII flows returning to emerging markets, with Chinese stocks also witnessing a sharp rally. Large frontline stocks are likely to be the focus of foreign institutional investors," said Manishi Raychaudhuri, Chief Executive Officer of Emmer Capital Partners.
According to Raychaudhuri, Reliance Industries, India's largest company by market capitalisation, offers several investment opportunities and significant inherent value. Its refining business, in particular, could benefit from an environment of declining crude oil prices.
The preference for frontline stocks is reflected in recent market performance. The benchmark Nifty 50 has rallied more than 8% over the past six trading sessions, compared with gains of 5.8% in the mid-cap index and 2.7% in the small-cap index.
The latest buying has also narrowed FPIs' year-to-date net selling to less than $27 billion, down from a peak of around $33 billion recorded in mid-October, according to Bloomberg data.
Meanwhile, domestic institutional investors (DIIs) were net sellers on Friday, offloading equities worth ₹5,968.70 crore, according to provisional data.