Foreign investors pour $5.9 billion into Indian markets in September
What's the story
India has emerged as a leading destination for foreign portfolio investors (FPIs), attracting a net investment of $5.9 billion into domestic stocks this month alone, according to Bloomberg data.
This significant inflow surpasses other emerging markets like Indonesia, Thailand, and Malaysia which received $1.92 billion, $1 billion, and $256 million, respectively.
In contrast, South Korea, Taiwan and Brazil experienced net outflows of $5.4 billion, $4.6 billion and $4.7 million respectively in the same period.
Economic stability
India's robust economic fundamentals attract FPIs
So far this year, India has drawn $11 billion of overseas investments, outperforming other emerging markets like South Korea, Indonesia and Malaysia.
This is despite the Indian market trading at 25.7 times its earnings compared to Malaysia's 16.0 times, Vietnam's 14.8 times and South Korea's 14.2 times.
Kranthi Bathini from WealthMills Securities stated that "While Indian market valuations may seem stretched in the short to medium term, the country's long-term prospects make it a safe haven for global investors."
Market trends
India's IPO market witnesses unprecedented foreign inflows
The attractiveness of India's initial public offerings (IPOs) has also led to significant foreign investment.
In September alone, the primary market received ₹10,781 crore from overseas investors, accounting for nearly 22% of the total monthly inflows of ₹49,459 crore.
This trend has continued throughout 2024 with the primary market consistently receiving positive inflows even during months of net outflows from the secondary market.
Sectoral spread
Foreign investments diversify across sectors in India
Foreign investors have shown interest in a diverse array of sectors, futhering their confidence in the growth potential of the Indian economy.
Year-to-date, the telecommunications sector has attracted the highest flows of ₹30,905 crore, followed by consumer services that received inflows amounting to ₹29,318 crore.
Additionally, capital goods, healthcare and realty sectors have emerged as key beneficiaries of foreign investment with an inflow of ₹27,239 crore, ₹21,177 crore and ₹12,349 crore, respectively.