Foreign Investors Maintain Optimism On Indian Equities In Sep So Far, Here’s What Happened

Meanwhile, the investors poured in Rs 7,525 crore in the Indian debt market during the first fortnight of the month, official data from the depositories revealed

This bullish outlook could be attributed to the resilience seen in the Indian market and optimism around the potential interest rate cut in the US.

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Foreign portfolio investors (FPIs) continued to be optimistic about domestic equities in September so far and infused Rs 27,856 crore as of September 13, 2024. Meanwhile, the investors poured in Rs 7,525 crore in the Indian debt market during the first fortnight of the month, official data from the depositories revealed.

This bullish outlook could be attributed to the resilience seen in the Indian market and optimism around the potential interest rate cut in the US, reported PTI. The investors have been consistently infusing the equities segment since June. Prior to that, the FPIs withdrew Rs 34,252 crore in April and May. The collective inflow in 2024 in equities touched Rs 70,737 crore.

Himanshu Srivastava, Associate Director, Manager Research, Morningstar Investment Research India, noted, “With the focus shifting to the US Federal Reserve's decision on interest rates in its upcoming FOMC meeting next week, its outcome will likely play a pivotal role in shaping the trajectory of future FPIs investments in Indian equities.”

Explaining the reasoning behind the optimism maintained by the investors, V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said, “First, there is a consensus now that the US Fed will start cutting rates from this month onwards, pushing the US yields down.Recent data showing US inflation cooling for the fifth consecutive month, hitting a 43-month low of 2.5 per cent year-on-year in August, has strengthened expectations that the US Federal Reserve may proceed with a rate cut at its upcoming policy meeting. This will facilitate fund flows from the US to emerging markets.Secondly, the Indian market is extremely resilient with strong momentum and missing out on the Indian market would be a bad strategy for FPIs.”

Further, regulatory reforms introduced by the authorities have helped streamline the process for FPI investments and provided a boost to investors sentiments. A global confidence in the economic outlook for India has also helped encourage investors to be bullish.