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MUMBAI: Dalal Street’s big bulls aka FIIs and DIIs shelled out big bucks on D-Street, making FY24 one of the best financial years in the history for equities in the country.

After being net sellers in FY23, foreign portfolio investors (FPIs) made a strong comeback in FY24 and poured in Rs 2.04 lakh crore into Indian equities. Going hand in hand with them were domestic bulls, who also pumped in more than Rs 2 lakh crore in the recently concluded financial year.

The robust inflows from both foreign and domestic institutional investors, alongside retail investors helped the market achieve several milestones in FY24. The benchmark Nifty50 clocked 27% gains, and the total market capitalisation of all the listed companies on BSE swelled by Rs 125 lakh crore in a year.

Riding past the largecap heroes by several miles were the smallcap ninjas, as the BSE Smallcap Index rallied a staggering 60% in FY24.

In fact, the combined market capitalisation of the BSE Smallcap Index of 1,000 stocks grew

by Rs 26 lakh crore to Rs 66 lakh crore in the financial year. In this process, 252 stocks or every fourth stock in the smallcap index has given multibagger returns.

FLOW SHOW

Between April 2023 and March 2024, FPIs were net sellers of equities only on three

instances, while DIIs were only on two instances.

In rupee terms, the highest inflows from FPIs was in December 2023, when they pumped

in Rs 66,135 crore. FPIs were consistent buyers in the initial part of FY24, as they bought

stocks worth over Rs 1.61 lakh crore between April and August.

However, a spike in US bond yields amid concerns that interest rates in the country may remain higher for longer saw FPIs pulling out money from risk-on equities and park in haven bonds.

In September and October, FPIs sold stocks worth over Rs 39,300 crore. But the saving grace for Indian equities during this period was the strong inflows from DIIs and retail investors.

DIIs were muted between April and July, but their action show which began in August went non-stop. Since August, DIIs net bought stocks worth Rs 2.03 lakh crore, with the highest monthly purchases in March at Rs 53,665 crore.


Amidst the gloomy global environment, robust corporate earnings, high capital investments by the government, strong domestic economic growth, and favourable monetary policy conditions were the key factors driving the massive flows into Dalal Street.

WHAT FY25 HAS IN STORE?

As far as outlook for India as an emerging market is concerned, it remains bullish and experts also see the earnings growth momentum continuing.

Even with the general elections round the corner, analysts don’t foresee high levels of volatility as the market is optimistic about a third term for the incumbent government.

Besides, interest rates are seen easing in the US, which will further aid foreign capital flows.

“We expect US Fed rate cuts will make FIIs to pour money in the Indian markets which could further keep the markets resilient leading to potential outperformance in 2024 as well,” said Viraj Gandhi, Chief Executive Officer, SAMCO Mutual Fund.

The outlook for the debt market also remains robust and one may see incremental foreign capital flows in this segment with the inclusion of India in the emerging market bond index by JPMorgan and Bloomberg.

While the momentum in equities may not lose its steam, some experts do see returns moderating in FY25 compared to FY24.

“We will probably see a steadier growth in the market. We will not see the likes of FY24 with a 30% rally in largecap and a 60% rally in midcaps and smallcaps; we will probably see that moderated down to around 15-20%, which is good enough,” said independent market expert Mahantesh Sabard.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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