After being aggressive sellers for two months, foreign institutional investors #FIIs seem to be taking a break of sorts, buying shares worth over Rs 23,500 in just four successive trading sessions...

Data from NSDL shows that FIIs have purchased shares worth Rs 14,964 crore since the start of December. Further, provisional data from the NSE further indicates that FIIs bought Rs 8,539 crore worth of shares on December 5, taking the cumulative buying to Rs 23,503 crore.

More importantly, the renewed buying activity by FIIs has fuelled a rally in local equities with benchmark indices Sensex and Nifty rising for five consecutive sessions. Both indices have gained over three percent during this period.

The recent buying activity is driven primarily by attractive valuations following the recent correction in stock prices. Additionally, there is an expectation that India's inflation has peaked, and the Reserve Bank of India (RBI) might begin reducing interest rates. This anticipation has prompted pre-policy buying. If interest rates decline as projected, the next 6–8 quarters could witness a gradual easing of rates, potentially accelerating economic growth at a pace faster than previously observed.

Another key factor influencing investment is the government’s increased spending, particularly on budgetary allocations and infrastructure projects. This is expected to drive higher economic activity in the second half of the fiscal year. Moreover, geopolitical developments, such as the US administration under Donald Trump showing a comparative preference for India over China, have also contributed to recent FII interest.

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