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NEW DELHI: Foreign investors injected Rs 27,856 crore in the first two weeks of September, primarily due to the market’s resilience and growing expectations of a potential interest rate reduction in the United States. Additionally, their total investment in equities reached Rs 70,737 crore so far this year.
FPIs have been consistently purchasing equities since June, following a withdrawal of Rs 34,252 crore in April-May.
“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, ” said Himanshu Srivastava, associate director- manager research, Morningstar Investment Research Indi.
VK Vijayakumar, chief investment strategist at Geojit Financial Services, identified two primary reasons for the strong buying by FPIs. Firstly, there is now a consensus that the US Fed will begin cutting rates from this month onwards, pushing US yields down and other reason is Indian market’s resilience and strong momentum make it an attractive destination for Foreign Portfolio Investors (FPIs). However, the high valuations in the Indian market remain a concern for investors.
Recent data indicating that US inflation has cooled for the fifth consecutive month, reaching a 43-month low of 2.5 per cent year-on-year in August, has reinforced expectations that the US Federal Reserve may proceed with a rate cut at its upcoming policy meeting.
“The robust inflows are due to underlying factors such as global confidence in India’s economic outlook and the government’s commitment to drive a long-term growth story. FPIs are encashing at the right time to tab the Indian market amidst positive market sentiments, political stability, contributing to the rally,” Manoj Purohit, Partner and leader, FS Tax, Tax and Regulatory Services, BDO India, said.
Moreover, a series of regulatory reforms aimed at streamlining the process for FPI investments has further boosted investor confidence. In addition to equities, FPIs have invested Rs 7,525 crore in debt through the voluntary retention route in the first two weeks of September and Rs 14,805 crore in government debt securities designated under the Fully Accessible Route (FAR).
FPIs have been consistently purchasing equities since June, following a withdrawal of Rs 34,252 crore in April-May.
“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, ” said Himanshu Srivastava, associate director- manager research, Morningstar Investment Research Indi.
VK Vijayakumar, chief investment strategist at Geojit Financial Services, identified two primary reasons for the strong buying by FPIs. Firstly, there is now a consensus that the US Fed will begin cutting rates from this month onwards, pushing US yields down and other reason is Indian market’s resilience and strong momentum make it an attractive destination for Foreign Portfolio Investors (FPIs). However, the high valuations in the Indian market remain a concern for investors.
Recent data indicating that US inflation has cooled for the fifth consecutive month, reaching a 43-month low of 2.5 per cent year-on-year in August, has reinforced expectations that the US Federal Reserve may proceed with a rate cut at its upcoming policy meeting.
“The robust inflows are due to underlying factors such as global confidence in India’s economic outlook and the government’s commitment to drive a long-term growth story. FPIs are encashing at the right time to tab the Indian market amidst positive market sentiments, political stability, contributing to the rally,” Manoj Purohit, Partner and leader, FS Tax, Tax and Regulatory Services, BDO India, said.
Moreover, a series of regulatory reforms aimed at streamlining the process for FPI investments has further boosted investor confidence. In addition to equities, FPIs have invested Rs 7,525 crore in debt through the voluntary retention route in the first two weeks of September and Rs 14,805 crore in government debt securities designated under the Fully Accessible Route (FAR).
