In the last 20 years, Foreign Portfolio Investors (FPIs) have taken the buying stand in the Indian equities market 13 times in December month. This happened because of the holiday season in overseas countries and foreigners are generally on holiday in December and early January. In 2024, FPIs were net sellers in the Indian equity market and have sold shares worth ₹1,18,620.6 crores (as on November 2024). Will December history repeat this year as well is something to watch out for?
Whenever Sensex and Nifty delivered negative returns in December in the last 20 years, FPIs sold the shares in the view of earning better returns from foreign markets. In November 2024, FPIs sold shares worth ₹39,315.8 crores. From September 27, 2024, Sensex has fallen by 6.7% while Nifty has fallen by 7.8%. So, the sharp drop in India’s stock market returns and higher returns by Chinese equities made the FPIs turn away from India in 2024.
Along with that, the decline in the July-September 2024 quarter earnings of the company, and the strengthening of the US dollar in line with the falling rupee are key factors of volatile Indian markets. The US being India’s largest exporting partner, and its uncertain stance on tariff rates have also kept India on the edge.
If the past trend of relaxing FPIs in December replicates this year, then the market could gain as the domestic investors were already the net buyers. Also, tomorrow’s RBI MPC meeting results on the rate cut will provide more clarity on the inflation level and its impact on the FPIs’ position.
It is wise to invest and keep your investment objective and risk profile in mind in the volatile markets. So, open demat account with SMC Global Securities and start your trading journey.
References:
https://economictimes.indiatimes.com/markets/stocks/news/holiday-season-likely-to-cool-pace-of-fpi-sales-in-december/articleshow/115881071.cms?from=mdr
SMC Global Securities Research Team
Author: All Content is verified by SMC Global Securities.
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