According to data from the National Securities Depository Ltd (NSDL), FPI inflows into Indian equities in December totaled Rs 66,135 crore, or $7.939 billion, compared to any other month in the calendar year of 2023. FPI inflows totaled Rs 84,537 crore or $10.149 during the month, including debt, hybrid, debt-VRR, and stocks.
The total buy figure of FPIs stands at Rs 2,37,062 crore or $ 28.7 Billion which includes debt, hybrid, debt-VRR, and equities funds in the calendar year of 2023.
Mainly, after the political party showed strong government stability in the country after the ruling NDA swept the key state elections of Madhya Pradesh, Rajasthan, and Chhattisgarh. However, the ruling NDA, not only won these states but did so with comfortable margins too. For the FPIs, this reassures made them turn towards the Indian market.
Secondly, India recorded 7.6% GDP growth in the second quarter of FY24, following 7.8% GDP growth in the first quarter. This prompted the RBI to raise its FY24 growth prediction by 50 basis points, from 6.5% to 7.0%.
Due to the large amount of IPOs in the market in 2023. Over Rs 53,000 crore was raised through 58 IPOs. Among them, 54 IPOs had excellent gains, which enthralled the FPI to a large extent.
India’s Inflation, despite bouncing to 5.5% in November remained well under control. The gratifying feature of inflation in India has been the sharp lowering of core inflation.
Lastly, Despite rising to 5.5% in November, India’s inflation remained firmly under control. The substantial decline in core inflation has been a strong characteristic of Indian inflation.
FPI has purchased Rs 6,351 crore or $ 0.76 Billion on year to date(08/01/2024) basis, which includes debt, hybrid, debt-VRR, and equity funds.
Here are the top sectors that saw significant FPI inflows in December 2023.
Financial Service sector
The financial service sector is a major segment of the economy composed of companies and institutions that provide commercial and retail customers with financial services.
Financial Services comprise both Banking and Non-Banking lending institutions. Insurance and Asset Management companies are also part of the Financial service sector.
The Fintech industry is the new edge service of the financial services sector. India’s FinTech industry market size was $50 Bn in 2021 and is estimated at ~$150 Bn by 2025.
The Indian Fintech industry’s Total Addressable Market is estimated to be $1.3 Tn by 2025 and Assets Under Management & Revenue to be $1 Tn and $ 200 Bn by 2030, respectively.
FPI inflow in the financial services sector was Rs 30,765 crore in December month, after selling for two straight previous months, while FPI sold Rs 3,174 crore in November. The S&P BSE Financial Services Index has risen 17.07 percent in a year.
Financial Services Index Constituents include 360 ONE WAM Ltd, Aditya Birla Capital Ltd, Bajaj Finserv Ltd, AU Small Finance Bank Ltd, Axis Bank Ltd, and many more.
Capital Goods Sector
Capital Goods has a market size of $43.2 billion in India. The capital goods industry is divided into ten sub-sectors, with electrical equipment being the largest, followed by plant equipment and earthmoving/mining machinery.
This sector was seen as a second favorite sector for FPIs in December month, and this sector has seen impeccable inflows of FII funds from the October months. The S&P BSE Capital Goods Index has risen 66 percent in a year.
In December, FII capital inflows into the Capital Goods sector were Rs 5,803 crore, up from Rs 3,359 crore in November.
Some of the famous stocks in the sector include Bharat Heavy Electricals Ltd, Siemens Ltd, ABB India Ltd, Thermax Ltd, and Engineers India.
Information Technology Sector
The IT industry contributed 7.4 percent of India’s GDP in FY22 and is expected to contribute 10 percent by 2025. India’s IT spending is anticipated to rise to US$ 110.3 billion in 2023, up from an estimated US$ 81.89 billion in 2021.
In December, FII capital inflows into the Information Technology sector were Rs 5,185 crore, up from Rs 812 crore in November.
The S&P BSE IT index climbed 5.93 percent in December month, and 17.72 percent in a year. Here are the major IT stocks in this sector such as TCS, Tech Mahindra, LTIMindtree, and Infosys.
Written by Omkar Chitnis
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