FPI inflows at Rs 33,700 cr in Sept
US rate cut, domestic market resilience driving investors’ confidence, this is the second highest inflow in a month this year, the last one being March with Rs35,100 cr in investments
New Delhi: Foreign investors have injected close to Rs 33,700 crore in domestic equities in this month so far primarily due to interest rate cut in the US and resilience of the Indian market. This also marks the second highest inflow in a month in this year so far, the last one being in March, when Foreign Portfolio Investors (FPIs) infused Rs 35,100 crore, data with the depositories showed. Going ahead, the trend of FPIs buying is likely to continue in the coming days, V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said. According to the data with the depositories, Foreign Portfolio Investors put in a net investment of Rs 33,691 crore into equities this month (till September 20). With this, FPIs investment in equities reached Rs 76,572 crore so far this year.
Since June, FPIs have been consistently buying equities. Before that, they pulled out funds to the tune of Rs 34,252 crore in April-May. In September, FPIs remained bullish, purchasing Indian equities on expectations of a US Federal Reserve rate cut and a rate cut on September 18 further fuelled their aggressive buying behaviour. “The trigger for the aggressive buying by FPIs was the 50-basis points rate cut by the US Federal Reserve on September 18, which is regarded as a big Fed pivot, marking the beginning of a rate cutting cycle. The Fed rate is expected to decline steadily to 3.4 per cent by end 2025. Bond yields in the US are steadily declining, nudging the FPIs to invest in emerging markets like India,” Vijayakumar said.
For global markets, the weakening US dollar and dovish Fed stance make Indian equities increasingly appealing. The rupee’s strengthening reflects confidence in India’s stability, although it could challenge the export sector, Robin Arya, smallcase Manager, and Founder & CEO at research analyst firm GoalFi, said. Additionally, balanced fiscal deficits, rate cut impacts on the Indian currency, strong valuations, and RBI’s approach to keep inflation under control without a rate cut are the primary factors for making emerging markets like India a sweet spot, Manoj Purohit, Partner and leader, FS Tax, Tax and Regulatory Services, BDO India, said.