FPIs pour record $6.6 bn into equities in November

By Urvashi Valesha

Indian equities have received net inflows of $6.6 billion from foreign portfolio investors (FPIs) in November, as outlook for the emerging markets continued to improve, and the September quarter earnings for India Inc positively surprised. Improving economic outlook and the government’s push for reforms helped improve capital flows.

According to the data on NSDL and Bloomberg, till November 20,FPIs pumped in $6.6 billion in total, which is the highest-ever monthly inflow for the Indian markets. In September 2009, inflows were at $6.3 billion.

The daily average buying by FPIs for November stood at $477.8 million. The calendar years of so far has seen net inflows of $13.5 billion and FPIs have remained buyers in all months barring March, April and September.

Equity markets around the world have been supported by loose monetary policy adopted by central banks across the world. In the near term, according to Credit Suisse, earnings revisions and excess liquidity are both supportive for global equities.The global investment bank said, “We expect a 15% rise in global equities by the end of 2021.We acknowledge tactical indicators suggest a pause, but not a correction. Emerging markets remain our highest conviction overweight, focusing on Thailand, Korea, Brazil and India, while we decrease China to a small overweight.”

On the Indian markets, experts say along with abundant liquidity, a quick recovery in corporate earnings by India Inc has helped. UR Bhat,director, Dalton Capital Advisors (India),said,“Foreign investors are chasing areas that will give them better returns,which in the current context is expected with EMs.

Apart from the abundant global liquidity, the better than-expected September quarter earnings, as well as declining Covid-19 numbers are the positives that are being factored in by the markets.The government’s push for reforms such as labour and agriculture and the speeches such as that by the Prime Minister to global fund houses certainly helped.” The September quarter earnings were much better than expected.The Nifty sales declined 7% year-on-year, while EBITDA, PBT and PAT reported growth of 8%, 14%, and 17%year on year.

Motilal Oswal Institutional Equities said,“With an upgrade to downgrade ratio of 4:1,this has by far been the best earnings season in many years. Our FY21, FY22E Nifty EPS estimates have been revised up 9% and 4% to RS 497 and Rs 677, from Rs 456 and Rs 651.We now expect FY21 Nifty EPS to grow 7%year-on-year.”

India remains the top performing EM for the month with in flows at$6.6 billion,followed by South Korea at $ 6 billion. Taiwan and Thailand received inflows worth $5.6 billion and $1 billion,respectively.