The total FII buying, including exchange purchases and investments through the ‘primary market and others’ category, reached Rs 22,765 crore as of December 13, according to NSDL data. This robust buying activity has sparked a rally, particularly in large-cap stocks, with the banking and IT sectors witnessing significant gains.
“Even though FIIs have turned buyers in December, they have been large sellers,too, on certain days. This indicates that at higher levels, they may again turn sellers since Indian valuations continue to be relatively high compared to other markets,” said V K Vijayakumar, Chief Investment Strategist of Geojit Financial Services.
Rising dollar is another concern which might prompt FIIs to sell at higher levels, Vijayakumar added.
However, this cannot be denied that the FIIs turning net buyers after a period of selling has provided much-needed momentum to the market, bolstering investor sentiment and driving indices higher.
The recent rally in the Indian market has also been driven by positive political developments, a recovery in corporate stocks, increased foreign investments – both in primary and secondary markets and broad sector participation.Also read: Sebi likely to facilitate retail participation in Algo Trading
“The Reserve Bank of India (RBI) enhanced liquidity by lowering the Cash Reserve Ratio (CRR), likely boosting market sentiment. Additionally, India’s Consumer Price Index (CPI) inflation dropped to 5.48% in November from 6.21% in October, enhancing investor confidence and raising hopes for potential monetary policy easing by the RBI, said Vipul Bhowar, Senior Director – Listed Investments at Waterfield Advisors.
Historical data shows that the Nifty index has closed higher in 71% of December since 2000, with significant gains noted in 2023 and 2020.
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