FPIs invest ₹11,000 crore in equities in first week of September


Foreign Portfolio Investors (FPIs) have been consistently buying equities since June. Before that, they had pulled out funds to the tune of ₹34,252 crore in April-May.

Foreign Portfolio Investors (FPIs) have been consistently buying equities since June. Before that, they had pulled out funds to the tune of ₹34,252 crore in April-May.
| Photo Credit: REUTERS

Foreign investors infused nearly ₹11,000 crore in domestic equities in the first week of the month owing to resilience of the Indian market and expectations of rate cut in the U.S.

Foreign Portfolio Investors (FPIs) have been consistently buying equities since June. Before that, they had pulled out funds to the tune of ₹34,252 crore in April-May.

The recent inflows are promising and could continue, supported by India’s stable macroeconomic position. However, global factors like U.S. interest rate and geopolitical scenario would continue to be the driving force, Himanshu Srivastava, Associate Director – Manager Research, Morningstar Investment Research India, said.

According to the data with the depositories, FPIs put in a net investment of ₹10,978 crore into equities this month (till September 6).

FPIs have been on a buying spree in the Indian equity markets after the sentiments improved following comments from U.S. Federal Reserve Chair Jerome Powell, who suggested that a rate cut might be on the horizon.

“The substantial net inflows this week can be attributed to enhanced speculation of the commencement of interest rate cut cycle soon, coupled with improved prospects for India’s economic growth,” Srivastava said.

Additionally, buying in few select large-cap stocks also contributed to the inflows, signalling foreign investors’ eagerness to capitalize on the opportunities presented by the Indian equity markets, he said.

Also, a series of regulatory reforms aimed at streamlining the process for FII investments has further uplifted investor sentiment.

The consequent fall in the U.S. 10-year bond yield to 3.73% is positive for FPI inflows into emerging markets like India, V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said.

However, the elevated valuations are a concern. If the U.S. growth concerns impact global equity markets in the coming days, FPIs are likely to use the opportunity to buy in India, he added.

Apart from equities, FPIs invested over ₹7,600 crore in the debt market during the period under review. Sunil Damania, Chief Investment Officer, MojoPMS, said concerns over a potential U.S. recession and China’s ongoing economic challenges are critical considerations for investors re-evaluating their allocations.

If the risk-off strategy continues to gain traction, emerging markets may experience a slowdown in FPI inflows, he added.