Relief, As Foreign Outflows From Indian Markets Ease - These Sectors See High Investor Interest

The foreign outflows in Indian equity markets were moderated in November after these investors-turned-buyers in the second half of the month, which snapped a 38-session selling streak.

In the last month, most foreign portfolio investors (FPI) poured money into financials and IT stocks, which reduced outflows to USD 2.55 billion from a record USD 11.2 billion in October, National Securities Depository data showed on Thursday.

Further, the Indian benchmarks also slipped into a sharp correction in November, 10 per cent below the record highs they had hit on September 27.

The benchmarks, have, however, recouped some losses in the last few weeks and Nifty 50 is currently down by about 6 per cent from its all-time high.

"There is clearly some value in Indian markets after the recent drop, and FPIs will return to India in a few months if domestic corporate earnings and economic growth see an improvement," said Nilesh Shah, managing director of Kotak Mahindra Asset Management Company.

FPIs brought investments worth USD 300 million in November, helped by inflows in the second half of the month. Foreign investors also took out USD 3.1 billion from the sector in October, the second-highest monthly sales on record.

What Did FPIs Buy And Sell In November?

MSCI, global indexes provider, also raised the weightage of top private lender HDFC Bank in their index rejig, which triggered foreign inflows in the sector, analysts say.

Meanwhile, IT companies, which earn a significant share of their revenue from the U.S., reported FPI inflows of USD 650 million in November.

Factors like a strong US economy and expectations of lower corporate tax rates after Donald Trump's US presidential victory prompted foreign interest in the IT sector, analysts said.