In December 2024, foreign portfolio investors (FPIs) have started putting money back into the Indian stock market, investing a total of Rs 21,789 crore so far. This is a big change after several months of pulling money out of the market. With this new investment in December, FPIs have put in Rs 6,770 crore in total for the year, compared to the Rs 15,019 crore they took out by the end of November.
Before this, FPIs sold a lot of Indian stocks, taking out Rs 21,612 crore in November and a whopping Rs 94,017 crore in October. In December, most of the money came into three main areas: financial services (Rs 7,424 crore), IT (Rs 6,754 crore), and real estate (Rs 4,689 crore). However, FPIs sold off Rs 5,337 crore worth of oil and gas stocks, along with Rs 1,823 crore of auto stocks, and Rs 1,655 crore of FMCG shares.
Despite selling off some shares, sectors like telecom and services started to attract attention again in December, getting investments of Rs 627 crore and Rs 553 crore. Oil and gas have been the biggest area for FPIs pulling money out in 2024, totaling Rs 50,851 crore, while financial services have seen withdrawals nearing Rs 54,000 crore for the year.
Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, mentioned that the sudden switch from buying to selling by FPIs has made the stock market shaky. At the start of December, FPIs were actively buying stocks, investing Rs 14,435 crore in the cash market until December 13. However, they flipped to selling, letting go of Rs 15,828 crore in the week ending December 20.
Factors like a stronger dollar, rising U.S. bond yields, and worries about slower growth in India helped trigger this change. Vijayakumar believes that as the U.S. economy stays strong, foreign investors might return to buying once growth in GDP and corporate earnings shows signs of improvement. He thinks that upcoming Q3 data might show a slight increase, and despite recent selling, prices for quality large companies in banks and sectors like pharma, IT, and digital platforms are becoming more attractive for investors.
This year, FPIs have had lots of ups and downs. They brought in the most money in September, with Rs 57,724 crore, while they invested Rs 7,322 crore in August, which was less than the Rs 32,359 crore in July. In June, they were back to buying at Rs 26,565 crore after selling in April and May. Even though they took out Rs 25,744 crore in January, FPIs were net buyers in February and March.
Recently, FIIs sold Rs 3,597.82 crore worth of stocks, while domestic institutional investors (DIIs) bought Rs 1,374.37 crore. The new inflows in December show that investor confidence is improving with global uncertainties easing and key sectors looking attractive.
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