FPIs pour ₹11,000 crore into Indian market this September
What's the story
Foreign portfolio investors (FPIs) have demonstrated robust confidence in the Indian market, investing a total of ₹11,030 crore in the first week of September.
This investment includes ₹9,642 crore channeled through exchanges into equity, and an additional ₹1,388 crore directed toward the 'primary market and others' category.
The strong interest from FPIs underscores India's resilience amid global economic uncertainties.
Market response
US economic slowdown may boost FPI inflows
Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, has indicated that the recent jobs data from the US suggests a slowing economy.
This development has raised expectations of a rate cut by the Federal Reserve in September, potentially by 50 basis points.
The resulting drop in the US 10-year bond yield to 3.73%, is seen as favorable for FPI inflows into emerging markets like India.
Investor sentiment
Global market sentiment shifts toward caution
Sunil Damania, Chief Investment Officer at MojoPMS, has noted a significant shift in global market sentiment toward caution.
This change is evident from NVIDIA's 25% decline after reaching a record high in June.
Concerns over a potential US recession and China's ongoing economic challenges, are critical factors for investors reassessing their allocations.
If the risk-off strategy continues to gain traction, the emerging markets may experience a slowdown in FPI inflows.
Market impact
FPIs play a crucial role in economic growth and stability
FPIs are considered vital as they enhance market liquidity and provide essential capital inflows, supporting economic growth and stability.
They also contribute to market efficiency, reflecting international confidence in a country's financial system.
However, Vijayakumar has warned that high valuations remain a concern.
If US growth worries affect global equity markets in the future, FPIs may seize this opportunity to invest more in India.