So far, FPIs have invested Rs 10,555 crore in equities in December to ease inflation in the US. After investing more than Rs 36,200 crore last month, foreign investors continued their positive momentum. They made a net injection of Rs 10,555 crore into Indian equities in December amid stable oil prices and moderating US inflation.

Looking ahead, FPI flows are expected to be volatile in global equity markets, with volatility set to increase as international central banks reiterate their intention to keep policy rates high for an extended period to curb high inflation in their respective economies, said Shrikant Chouhan, director of equity research, (retail), Kotak Securities Ltd.

In addition, global developments will determine capital flows, especially the direction of the US dollar index and US bond yields. That, in turn, will depend on the trajectory of US inflation, said V K Vijayakumar, chief investment strategist at Geojit Financial Services.

According to the custodian, foreign portfolio investors (FPIs) had a net investment of Rs 10,555 crore in equities between December 1 and 16. This comes after net assets surpassed Rs 36,200 crore in November, mainly due to a weaker US dollar index and positive sentiment on overall macroeconomic trends.

This follows foreign investors who withdrew Rs 8 crore in October and Rs 7,624 crore in September, data from the depositary showed.

In terms of industry, FPIs have been buyers of financial and capital goods and sellers of telecommunications. Overall, FPIs have made a net withdrawal of Rs 1.22 lakh crore from the stock market in 2022.

On the other hand, foreign investors pulled a net of Rs 2,180 crore from the bond market this month. Apart from India, FPI flows in emerging markets, including the Philippines, South Korea, Taiwan, Thailand, and Indonesia, were negative in December.