Mumbai: A surge in foreign investments has boosted Indian stocks. The Nifty 50 index rose 11% in dollar terms from October 30 to November 11. This increase outpaced a 9.5% gain in rupee terms, reversing a trend of underperformance for overseas investors. Before this, the Nifty 50 had delivered negative dollar returns of 16.77% for the year through October 30. In comparison, the decline in rupee terms was 10.92%.
Key Details
Foreign portfolio investors (FPIs) net bought shares worth ₹60,698 crore in the first 11 days of November. This marks the highest monthly inflow since December 2023, according to NSDL data. Analysts link the renewed interest in Indian equities to a cooling AI trade in the U.S. and falling oil prices after Republican losses in the midterm elections. The rupee appreciated 1.5% to ₹93.69 against the dollar as of November 11. This recovery comes after earlier record lows.
Background
Despite the recent gains, the rupee faced pressure from dollar purchases by state-owned banks. This occurred ahead of India's October inflation data and rising crude oil prices. The dollar's strength, along with hawkish signals from the U.S. Federal Reserve, added to the rupee's challenges. Madan Sabnavis, chief economist at Care Ratings, noted that if crude prices stay below $100 per barrel, the rupee could strengthen further by year-end.
The recent foreign inflows are likely to support Indian equities, especially for the Nifty 50 index. However, fluctuations in the rupee against the dollar could affect foreign investor sentiment. Investors will keep an eye on the upcoming inflation data release on November 12. This data may impact currency and market dynamics.
Based on reporting by: livemint.com, moneycontrol.com