By Rohit Vaid

Mumbai, Jan 6 (IANS): Breaking with tradition, FIIs have shown persistent interest in India's equities by pumping up the never ending bull run during the unusual pandemic-afflicted time period.

Analysts across the board opined that such a scenario was visible during last month, which historically sees less to no FII activity given the international holiday season.

But, the search for a decent 'RoI' brought several FIIs to India's shores even in December.

Last month they invested Rs 62,016 crore in equity, while in December 2019, inflows stood at just Rs 7,338 crore.

"In 2018-19 and 2019-20, December gains were muted and January also was not such a great month. This time around, due to the pandemic-related effects and the relentless flow from FPIs, year end profit taking activity seemed to be limited in December as everyone was convinced that they could get a better exit in January," said Deepak Jasani, Head of Retail Research at HDFC Securities.

"To that extent part of the January effect played out in December. Having said that we could still see some gains coming in January especially the early part."

Even staycations and lockdowns amongst other reasons didn't let FIIs lose their interest in India.

"In 2020 Christmas, due to the restrictions on travel and lockdowns in various parts of the globe, employees of FPIs did not travel during holidays but monitored markets from home on holiday," Jasani said.

"Some FPIs remained active even in the last week of December. However we saw a less than normal fall in their activity levels in the Dec 28-Dec 31 week."

Besides, a faster-than-anticipated macro recovery, expectations of healthy Q3 and an expedited vaccine roll-out programme is likely to accelerate their investments into the market.

"In an unorthodox move, FIIs have been active in Indian markets from November 2020 with the peak of its activity in December 2020," said Gaurav Garg, Head of Research at CapitalVia Global Research.

"This has been mainly due to lenient monetary policy, recovering economy from past quarters post pandemic and the increased ratings from agencies like Moody's have contributed for the significant activity of FIIs in December 2020."

Going further, volatility on account of profit booking can not be ruled out, said market observers, adding that these dips will ultimately lead to bottom fishing, thereby, reigniting the up move.

"GDP growth and earnings growth in India in FY 22 will be among the best in the world. This is yet another reason for the FII flows into India," said V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

"So long as the capital flows continue, markets will remain strong. On the flip side, valuations are becoming excessive making the markets vulnerable to sharp correction."

According to Siddhartha Khemka, Head - Retail Research, Motilal Oswal Financial Services: "This trend of FIIs' inflows is likely to last for some more time at least till the Budget 2021-22 is announced."

"Besides, FIIs are also looking forward to healthy Q3 results and management's commentaries. However, there is a likelihood of some profit booking but these dips are expected to be bought into very quickly."