Foreign Investors Inject Rs 11,730 Crore into Indian Equities Last Week Amid Positive Market Signals

Foreign investors showed strong confidence in Indian markets by injecting Rs 11,730 crore (USD 1.4 billion) in the week ending June 14. This turnaround follows a net outflow of Rs 14,794 crore (USD 1.77 billion) just a week earlier from June 3-7, as reported by depositories.

Market Stability

The recent inflow marks a notable shift, bringing the month’s net outflow to Rs 3,064 crore until June 14. Experts attribute the renewed investor interest to stabilising market conditions, highlighted by a significant drop in India VIX from 27 on June 4 to 12.82 on June 14, indicating a return to stability and a potential consolidation phase.

The formation of the NDA government for a third consecutive term boosted expectations of continued policy reforms and economic growth, influencing investor sentiment positively. Moreover, lower-than-expected inflation figures in the US raised hopes of potential rate cuts, leading to a decline in US treasury yields and prompting increased risk-taking in markets like India.

Investment Trends and Outlook

Despite recent withdrawals in April and May due to concerns over policy changes and global economic conditions, foreign portfolio investors (FPIs) remain cautiously optimistic about Indian equities. They have also shown interest in the debt market, investing over Rs 5,700 crore so far this month.

Looking ahead, market experts foresee a positive long-term outlook for FPI investments in Indian debt, driven by India’s inclusion in global bond indices. However, short-term flows could continue to be influenced by global economic uncertainties and market volatility.

In 2024, FPIs have withdrawn Rs 26,428 crore from equities while investing Rs 59,373 crore in the debt market, underscoring their dynamic investment strategy amidst evolving global economic conditions.