By opening $1 billion purse, FIIs turn net buyers in November after 2 months

Amid moderating US bond yields and fading concerns of interest rate hike, foreign institutional investors or FIIs have turned net buyers of Indian stocks in November after being on the selling side in the previous two months.

NSDL data shows that FIIs have bought Indian stocks worth about $1 billion last month in which Nifty ended 5.6% higher. The buying by FIIs, DIIs as well as ever-bullish retail investors has led to an increase in the total market capitalisation of all BSE-listed stocks to $4 trillion and catapulted the index to all-time high levels.

The total FII inflow in calendar year 2023 now stands at $12 billion.


November month's rollover data shows that FIIs were busy covering shorts. Their net shorts stood at 57,000 contracts vs 152,000 short contracts at the start of November series. Their long-short ratio increased from 0.12 to 0.56.

In Single Stock Futures (SSF), FIIs turned net long from -136,000 contracts previous expiry to 69,000 contracts this expiry.

Inflows in December month, in which Nifty has a strong track record of bullish momentum, will be decided by a bouquet of events right from OPEC meeting (influencing oil prices), assembly elections results, RBI monetary policy and US Fed interest rate decision. Besides, year-end holiday season may induce volatility in the absence of liquidity, experts say.

Domestic broking firm Kotak Institutional Equities has told investors that the index is now 13% overvalued by looking at expected growth, bond yields, profitability and VIX.

"While index starting valuation may not be a sufficient precondition for a price-correction, we do not expect any decent upside to the Nifty index over the next six months and do anticipate a time correction," Kotak said while recommending a cautious stance in the medium term.

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