FPIs bullish on Indian equities, invest ₹33,700 crore in September
Foreign portfolio investors (FPIs) have invested nearly ₹33,700 crore into Indian equities this month. This significant inflow is primarily attributed to the US interest rate cut, and the resilience of the Indian market. The data indicates that this is the second-highest monthly inflow for 2024, with March witnessing an infusion of ₹35,100 crore by FPIs.
Net investment reaches ₹76,572 crore
As of September 20, FPIs have made a net investment of ₹33,691 crore into equities. This brings their total equity investments for the year to ₹76,572 crore. Since June, there has been a consistent trend of FPIs investing in equities after withdrawing funds amounting to ₹34,252 crore in April and May.
US Federal Reserve rate cut triggers aggressive buying
In September, FPIs have shown a bullish stance toward Indian equities. This was due to expectations of a US Federal Reserve rate cut. The actual rate cut on September 18 further spurred their aggressive buying behavior. "The trigger for the aggressive buying by FPIs was the 50 basis points rate cut by the US Federal Reserve on September 18," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Indian equities attract global markets amid weakening US Dollar
The weakening US Dollar and dovish stance of the Fed make Indian equities more attractive to global markets. The strengthening Rupee reflects confidence in India's stability, although it could pose challenges for the export sector, according to Robin Arya, Manager at smallcase and Founder & CEO at research analyst firm GoalFi. Balanced fiscal deficits, rate cut impacts on INR, strong valuations, and Reserve Bank of India (RBI)'s approach are primary factors which are making emerging markets like India appealing.
IPOs attract foreign funds, boosting Indian capital market
The IPOs announced this year have attracted a significant portion of foreign funds, making the Indian capital market buoyant and an attractive place to shift positions from other riskier countries. This surge in FPI money has appreciated the Indian Rupee (INR) by 0.4% for the week ended September 20. However, concerns remain about the market overheating and valuations getting stretched.
FPIs infuse ₹7,361 crore into debt via VRR
In addition to equities, FPIs have also invested ₹7,361 crore into debt through the Voluntary Retention Route (VRR) and ₹19,601 crore via the Fully Accessible Route (FRR). These inflows into both equities and debt highlight the potential for renewed FPI engagement. However, ongoing global volatility and recession fears remind us of the delicate balance ahead. The actions of the RBI will be crucial in this evolving landscape.
