Why are foreign investors or FPIs again started buying so aggressively in Indian stocks?

You can almost say that Foreign Portfolio investors are back with a bang in the Indian equity markets. That is evident from the data in the last two weeks. A large part of the massive rally in Nifty and Sensex in the last few days has been triggered by FPI flows.

To put the picture in the right frame; in the first two weeks of November 2020 the FPIs have infused over Rs.35,000 crore of money into India. This is approximately equal to the amount infused in the first seven months of this fiscal between Apr-20 and Oct-20. That shows you how intense the flows have been in November.

Why this euphoria and enthusiasm to invest in India. The euphoria among FPIs was largely triggered by a combination of a Biden victory, better than expected corporate results in Sep-20 quarter and not to forget, the stimulus 3.0 package announced by the government.

Just look at the numbers to get a bird’s eye view. In the first 2 weeks of November alone, FPIs infused Rs.29,436 crore into equities and Rs.5,673 crore into debt taking the total FPI infusion to Rs.35,109 crore. This includes the IPO and anchor investments also.

Apart from some strong macro reasons, most FPIs are also betting on the weakness in the US dollar post Biden helping India. Of course, the MSCI tweak would account for $3 billion of passive flows and that is also leading to a lot of front buying in anticipation of this shift.