The markets are showing signs of stabilising after the sharp cuts recently. What’s particularly heartening is the back to back FII buying seen in the last 10 days. Foreign institutional investors have bought a little over Rs 19,000 crore in March so far. This after consecutive 5 months of FII selling is no doubt helping lift investor sentiment.
However, it is important to understand whether the current buying is a definitive comeback signal or mere flash in the pan. According to Akshay Chinchalkar, Head of Research, Axis Securities, “FIIs have infused Rs 19,831 crore in Indian markets so far, in March. Whether it is the start of something bigger will depend on a few things, such as:
1) A drop in rupee volatility
2) Falling treasury yields in the US and lower g-sec yields in India, on expectations of further rate cuts
3) Measured tariffs from the trump administration going forward
4) Valuation attractiveness of India relative to the EM pack
5) An overall risk-on environment for global equities.”
ALSO READ‘We expect FIIs to continue to sell for some more time’- Nilesh Shah FII action in last 6 months MonthFIIs Net Sell/Buy (Rs cr)October, 2024-114,445.89November, 2024-45,974.12December, 2024-16,982.48January, 2025-87,374.66February, 2025-58,988.08March, 2025 (till March 25)-6,984.80 (till March 25)FIIs have bought Rs 19,831 crore worth equities in March so far. Are FIIs back? 3 key factors to watch
Here is a look at the 3 key factors to watch as investors calibrate the big FII strategy –
Rupee at multi-week highs
The rupee is currently trading at its highest levels since January this year. Interestingly the currency had declined nearly 2% in the last 1.5 months on the back of a strengthening dollar. However, RBI liquidity boost helped stabilise the currency’s fall to some extent.
Shrikant Chouhan, Head Equity Research, Kotak Securities pointed out that, “FIIs try to anticipate several factors while investing in any country. Especially for an emerging country like India they compare the trend of the currency and earnings of the corporates with their own country. These two factors display the policy maker’s intention and strength of the corporates. The valuations of companies have softened in the last 5 months and the trend of the currency should stabilize after April 2 when there is clarity on the tariffs from the US.
» Read More
