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Below the quote on FPI from Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

An important trend in the market is the increasing clout of DIIs, HNIs and retail investors and the diminishing influence of FPIs. During August, September October and November till 15th FPIs cumulatively sold stocks for Rs 83422 crores through the exchanges. During this period DIIs alone bought stocks worth Rs 77995 crores. FPI selling is completely getting neutralised by DII and individual investor buying. This is the reason why Nifty is around 19700, the same level which it was in early August. 

The resilience of the market and strong up moves on favourable days have forced a rethinking in FPI strategy. That’s why they turned buyers on 15th and 16th of this month after sustained selling in the first two weeks of November. 

The sharp decline in the U S 10-year bond yield to 4.45% has turned out to be an inflection point for the mother market and thereby to the global stock markets. Markets now believe that the Fed is done with rate hikes and will slowly start discounting rate cuts in 2024. If the declining trend in US inflation persists the Fed may cut rates by mid 2024. This can facilitate FPI inflows into EMs like India. 

The RBI action of raising the risk weightage of unsecured loans have affected the sentiments in the banking and financial segments. However, this is likely to be short lived since the profitability of the leading banks are unlikely to be impacted. Anyway, institutions will prefer to invest more in sectors like autos, capital goods, telecom, pharmaceuticals, IT and construction-related segments in the near-term.

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