FIIs buy over $3 bn of Indian equities in last five sessions

Foreign institutional investors (FIIs) invested a net $3.02 billion in Indian shares between 11 and 17 November, after selling shares worth a net $3.40 billion between 6 October and 10 November.

“Foreign portfolio investment activity in the secondary markets over the last few days has been subdued, but the flows in the primary markets have been large, reflecting their subscription to the recent initial public offerings (IPOs), including PayTM’s,” said Deepak Jasani, head, retail research, HDFC Securities.

Between 11 and 17 November, Latent View Analytics, Tarsons Products Ltd, and Go Fashion’s IPOs opened for subscription. Latent View Analytics was the biggest subscribed IPO in the last 20 years, setting a record by being subscribed 338 times with bids worth `1.13 trillion. Tarsons Product got subscribed 77 times.

This FII buying was despite Indian and global equities falling amid inflation pressures, which raised concerns that the US Federal Reserve may tighten policy rates faster than expected. Domestically, amid higher-than-expected inflation in October, upside risks, and the need for policy normalization, analysts expect the Reserve Bank of India to start tightening soon.

Sensex and Nifty fell for the third straight session on Thursday and declined 1.8% and 1.9% respectively, in this period. Both Sensex and Nifty hit all-time highs on 18 October and since then have lost nearly 3.8% each. So far this year, both Sensex and Nifty rose 26% and 27% respectively.

US retail inflation jumped to 6.2%, the highest in more than three decades, which was negative for global markets. The market is now recalibrating its expectations of the Fed’s response to the rising inflation as it appears to be biased towards being non-transitory. An anticipated higher quantum of tapering by the Fed may lead to emerging markets, including India, receiving reduced foreign investments, analysts said.