Foreign investors invested Rs 11,000 crore in Indian stock market in 5 days, know the reason

Foreign investors have invested about Rs 11,000 crore in the domestic stock markets in the first week of the month. FPI investment has increased due to strength in the Indian market and expectations of interest rate cuts in the US. Foreign portfolio investors (FPIs) have been continuously buying equities since June. Earlier, they had withdrawn an amount of Rs 34,252 crore in April-May. Himanshu Srivastava, Associate Director, Morningstar Investment Research India, said that the recent investments are promising and India’s strong macroeconomic condition may continue. However, global factors such as US interest rates and geopolitical scenarios will remain the driving force. 

Due to this, investment in the market increased 

According to the data, FPIs have made a net investment of Rs 10,978 crore in shares this month (till September 6). FPIs are investing in Indian equity markets after the sentiment improved following the comments of US Federal Reserve Chairman Jerome Powell. He had indicated that interest rates could be cut. Srivastava said, “The reason for the net inflow this week can be attributed to the increased chances of the interest rate cut cycle starting soon in the US. It can also be attributed to the better prospects of India’s economic growth.” He said that apart from this, buying shares of select big companies also contributed to the investment. This indicates the eagerness of foreign investors to take advantage of the opportunities offered by the Indian equity markets. 

High valuations remain a concern 

Also, a series of regulatory reforms aimed at streamlining the process for FII investments have further boosted investor sentiment. VK Vijayakumar, chief investment strategist at Geojit Financial Services, said the fall in yields on 10-year bonds in the US is positive for FPI flows into emerging markets like India. However, high valuations are a matter of concern, he said. If concerns over US growth impact global equity markets in the coming days, FPIs may use this opportunity to buy in India. During the period under review, FPIs invested more than Rs 7,600 crore in the bond market besides equities.