FPIs Go Bullish on Financial Stocks in September: ₹33,300 Crore Inflows Surge on US Fed Rate Cut Optimism

Foreign Portfolio Investors (FPIs) have shown renewed interest in Indian financial stocks in September, with total inflows reaching ₹33,300 crore so far. This surge is linked to optimism about a potential rate cut by the US Federal Reserve, which did occur on September 18, with a 50 basis point reduction – more than what was expected.

FPIs have been pouring money into Indian stocks, making this the second-highest inflow of 2024 after March, when ₹35,100 crore was invested. With one trading week left in the month, FPIs are continuing their buying spree, particularly in financial services. From September 1 to 15, FPIs invested ₹12,253 crore in financial services stocks, reversing their trend of selling ₹12,008 crore in August and ₹7,648 crore in July.

Apart from financial services, the healthcare sector has remained attractive to FPIs, receiving ₹3,652 crore in the first half of September, following strong inflows in August and July. Other sectors seeing FPI interest include real estate, with inflows of ₹2,903 crore, and consumer durables, which attracted ₹2,226 crore during the same period.

The capital goods sector received ₹1,778 crore, while the oil, gas, and consumable fuels sector attracted ₹1,672 crore in FPI inflows. Telecommunications and FMCG also remained favourites, bringing in ₹1,699 crore and ₹1,372 crore, respectively. The power sector saw inflows of ₹1,167 crore during the first half of September.

According to analysts, FPI flows into India could pick up further if the US Federal Reserve continues to cut rates, boosting investor sentiment. Seshadri Sen, Head of Research and Strategist at Emkay Global Financial Services, believes FPIs may increase their exposure to India, despite high valuations. Currently, FPI net inflows for 2024 stand at ₹423 billion, compared to ₹1.7 trillion in 2023, showing potential for further growth.

On the other hand, some sectors have seen FPI outflows. Automobiles and auto components faced withdrawals of ₹1,983 crore, following a similar trend in August. The metals and mining sector saw outflows of ₹1,857 crore, and the construction materials sector recorded outflows of ₹393 crore in the first half of September.