Foreign Portfolio Investors (FPIs) have returned to the Indian stock market in September with strong buying activity. This is largely due to expectations that the U.S. Federal Reserve might soon start cutting interest rates, which could lead to more money flowing into emerging markets like India.
According to data from NSDL, FPIs invested a net amount of $3,682 million (about Rs 30,908.1 crore) in Indian equities by September 17. This is higher than the net monthly flow for six out of the eight previous months in 2024. On September 13 alone, FPIs invested $949 million, making it the second-highest single-day net investment in the Indian stock market this year, following the $1,731 million invested on August 30.
The strong buying in September has flipped FPI net equity inflows for 2024 from an outflow of $1,417 million at the end of August to a positive inflow of $1,450 million by mid-September. If this trend continues, September could surpass the highest monthly net investment of $4,241 million seen in March this year, though the outcome will depend on the Federal Reserve’s policy decision on Wednesday.
In September, FPIs have shifted their focus more toward the secondary market, investing $2,867 million in this segment. This is different from previous months when FPIs were more active in the primary market, such as IPOs and qualified institutional placements (QIP). So far in 2024, FPIs have invested $6,580.8 million in the primary market but were net sellers in the secondary market until now.
VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, mentioned that the resilience of the Indian market and the potential rate cut in the U.S. are driving FPIs’ increased buying in Indian equities. However, while FPIs are active, domestic mutual funds appear to be slowing down. As per SEBI data, domestic funds have invested Rs 8,951 crore in equities by September 11, which is lower compared to Rs 17,570 crore during the same period in the previous month.
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