FPIs remain saddled-up, awaiting green signal on rate cut (Weekly Review)

An upbeat economic scenario, coupled with international global cues and anticipation of a dovish central bank move in its upcoming monetary policy review have firmly got foreign investors' interest glued to Indian equities.

Supportive global cues, like OPEC (Organization of the Petroleum Exporting Countries) decision to maintain current supply levels and continued stimulus for the Chinese economy held foreign capital on Indian shores.

While further expectations of improved growth, reforms and growing expectations of an early interest rate cut saddled the foreign investor into the Indian markets.

For the week ended Nov 28, the FPIs bought stocks worth Rs.2,975.48 crore or $480.89 million, according to data with the National Securities Depository Limited (NSDL).

The foreign institutional investors (FIIs) along with sub-accounts and qualified foreign investors have been clubbed together by market regulator Securities and Exchange Board of India (SEBI) to create a new investor category called FPIs.

The FPI's previous week inflows was in contrast to their investments in week ended Nov 21, when they purchased about Rs.1,675.75 crore or $271.65 million in stock.

Week-on-week basis, the foreign inflows zoomed by 77.56 percent at Rs.2,975.48 crore reported for the week ended Nov 28 from Rs.1,675.75 crore in the previous week ended Nov 21.

The FPIs invested Rs.738.76 crore or $119.41 million in the Indian equities markets on Nov 28.

On Friday, positive international and domestic cues led a bullish drive in a benchmark index of Indian equities markets which hit a record high of 28,822.37 points.

For the coming week, analysts said that the FPIs will watch every sign from the central bank anxiously which will dictate their near-to-medium term trading trends.

The decision on upcoming interest rate from the central bank is due next month when it holds the fifth bi-monthly monetary policy review on Tuesday, Dec 2, 2014.

"Markets are hoping for a rate cut in the RBI policy meeting next week. Going ahead, apart from the RBI meeting, fiscal reforms from the Government will be needed for the markets to move higher on a sustainable basis"" Dipen Shah, head of private client group research, Kotak Securities.