FPIs Maintain Optimistic Outlook In Indian Equities In Sep So Far, Find Out Why

Official data revealed that the investors infused almost Rs 11,000 crore in the segment in the first week of September, while the inflow in the Indian debt market crossed Rs 7,600 crore

Foreign portfolio investors (FPIs) maintained their optimistic outlook towards Indian equities in September backed by a resilience in the domestic market and anticipations of rate cut in the US. 

Official data from the depositories revealed that the investors infused almost Rs 11,000 crore in the segment in the first week of September, while the inflow in the Indian debt market crossed Rs 7,600 crore, as of September 6, 2024, reported PTI.

Himanshu Srivastava, Associate Director - Manager Research, Morningstar Investment Research India, explained that the recent infusion seen in equities could continue backed by the country’s stable macroeconomic position. The analyst, however, pointed out that global factors such as the US interest rate and geopolitical tensions are the main driving force behind the optimism. Notably, the net inflow in equities stands at Rs 10,978 crore in the period under review.

“FPIs have been on a buying spree in the Indian equity markets after the sentiments improved following comments from US 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 further highlighted.

V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, noted that investor sentiment has also improved after consistent reforms were introduced in the regulatory processes as these have helped make the whole system much more smoother. “The consequent fall in the US 10-year bond yield to 3.73 per cent is positive for FPI inflows into emerging markets like India,” he added.

Vijayakumar pointed out that the higher valuations still remain a point of concern. “If the US growth concerns impact global equity markets in the coming days, FPIs are likely to use the opportunity to buy in India,” he stated.