How has the FPI inflow scene been like in the month of December 2020 till date? Is it as aggressive as November?

In the first 24 days of December, the foreign portfolio investors or FPIs have invested Rs.60,094 crore into the Indian markets. Out of this massive infusion, the lion’s share of Rs.56,643 crore has gone into equities while a much more humble Rs.3,451 crore went into debt. The good news is that, at least, debt is seeing positive flows on a monthly basis.

Compared to the first three weeks, the data for the latest week was relatively tepid but that was more due to year-end concerns. Normally, around the end of the year, most FPIs are cautious about not causing any disruption to the profits that they have already booked and hence prefer to play it slow in most emerging markets. To that extent flows are amazing.

The funds infused in December till date is very close to the total funds infused in Nov-20. We still have nearly one week of market trading left so there is every possibility that FPI flows in December could be bettering the flows in November. After all, the results of the US election resulted in an all-round risk-on trade favouring emerging markets like India.

FPIs have also responded favourably to the promise of sustained accommodative policies by the central banks, especially the Fed and the RBI. This has helped keep the liquidity taps flowing. The BREXIT deal came as a sentiment booster for FPIs and that was one item of uncertainty in the list, which has been addressed with a good degree of finesse.