Foreign portfolio investors (FPIs) infused nearly Rs 33,700 crore in domestic equities in September so far on account of the interest rate cut introduced in the US and the strength of the Indian market. Official data from the depositories showed that the investors pumped in Rs 33,691 crore in equities, till September 20.
Meanwhile, the investors poured in Rs 7,361 crore in the debt market via the Voluntary Retention Route (VRR) and Rs 19,601 crore through the Fully Accessible Route (FRR), the data revealed. This month also clocked the second-highest monthly inflow seen in the year so far, with the last peak seen in March when FPIs invested Rs 35,100 crore in the segment, reported PTI.
V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, noted that this trend of buying from the FPIs is likely to continue in the week. In September, the investors maintained their bullish outlook and bought Indian equities on anticipation of a rate cut from the US Federal Reserve, he stated.
“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 explained.
Robin Arya, smallcase Manager, Founder and CEO, GoalFi, stated, “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.”
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Notably, the FPI investment in equities in the year has touched Rs 76,572 crore. Prior to June, the investors withdrew Rs 34,252 crore from the segment during April-May.