Foreign Investors Shift Towards Buying in Indian Markets
Analysts noted on Sunday that foreign institutional investors (FIIs) have notably cut back on their selling activities in Indian markets, even making some purchases in just a few days.
FII sales had dipped significantly, falling to approximately Rs 4,114 crore by October 17.
Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Ltd, suggested that the shift in FII strategy stems from a narrowing valuation gap between India and other markets. The somewhat underwhelming performance of India in the past year seems to hint at potentially better outcomes ahead.
Moreover, the outlook for increased profits is looking brighter due to recent fiscal and financial reforms. He pointed out that strong sales figures in automobiles and consumer goods during the holiday season add to this positive outlook.
As valuation differentials decrease and India’s earnings prospects appear to improve for FY27, it seems likely that FIIs will continue to reduce their selling activities. The current high valuations in India compared to lower ones elsewhere are pivotal factors in this new strategy.
A noticeable aspect of FII behavior over the past couple of years has been their consistent investment in the primary market.
Analysts highlighted that the relatively low valuations for IPOs and the preferential allocation to institutional investors have made primary market investments attractive for FIIs, a trend that is expected to persist.
The markets have entered a new week with an optimistic sentiment.
Ajit Mishra, senior vice president of research at Religare Broking, stated that factors like declining inflation, robust domestic economic indicators, and strong earnings momentum create a favorable medium-term outlook. This week is particularly eventful, with several important developments on the horizon for investors.
On October 21, a special one-hour Diwali Muhurat trading session will take place to kick off Samvat 2082, likely drawing significant participation from both retail and institutional investors as they engage with festive sentiment.
