Foreign Portfolio Investors (FPIs) continued to invest heavily in the Indian stock market for the fourth month in a row during September. This came after the US Federal Reserve made a significant interest rate cut of 50 basis points.
Data from the National Securities Depository Ltd. (NSDL) shows that FPIs invested ₹57,724 crore (around $6.89 billion) into Indian stocks in September. This brought total FPI investments in Indian equities to ₹89,717 crore for the first half of the financial year 2024-2025 (H1FY25).
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However, in October, FPIs started selling, leading to a large outflow of ₹27,142 crore from the stock market during the first week of the month.
September Boosts Stock Market
The high level of FPI activity in September helped push India’s main stock indices, the Sensex and Nifty 50, to record highs. On September 27, the Sensex hit 85,978.25, and the Nifty 50 reached 26,277.35.
Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said that the Federal Reserve’s rate cut on September 18, along with a more favorable outlook, encouraged FPIs to invest in emerging markets like India.
FPI Buying Focus
In September, FPIs mainly focused on buying financial stocks, injecting ₹27,200 crore into the sector. This marked a reversal from the previous two months, where FPIs had withdrawn ₹12,008 crore in August and ₹7,648 crore in July. The renewed interest helped the Bank Nifty rise by more than 3% during the month.
The Healthcare sector also attracted significant FPI investments, with ₹6,639 crore in September. This built on the ₹5,831 crore invested in August and ₹5,054 crore in July. The Real Estate sector saw strong FPI inflows as well, totaling ₹5,375 crore.
Other sectors that benefited from FPI interest include Fast-Moving Consumer Goods (FMCG), which received ₹4,900 crore, and Capital Goods, which attracted ₹4,002 crore. Consumer Durables and Telecommunications also saw inflows of ₹3,736 crore and ₹1,935 crore, respectively.
FPI Selling Trends
Despite the overall positive trend, some sectors faced FPI sell-offs. The Consumer Services sector experienced outflows of ₹2,940 crore in September. The Automobile and Auto Components sector also saw FPIs pulling out ₹2,106 crore, following similar outflows of ₹2,379 crore in August.
FPIs also sold ₹1,219 crore worth of shares in the Information Technology (IT) sector in September, reversing the ₹4,036 crore in inflows seen in August.
What’s Next?
Looking ahead, investors will closely watch the Q2 earnings reports and the upcoming monetary policy decision from the Reserve Bank of India (RBI) this week. Global events such as the Israel-Iran conflict, the US dollar’s performance, and potential further rate cuts by the US Federal Reserve will also influence FPI activity in the Indian stock market.
Disclaimer: The views and investment tips expressed by investment experts on Sharepriceindia.com are their own and not those of the website or its management. Sharepriceindia.com advises users to check with certified experts before taking any investment decisions.
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