Foreign investors looted the Indian stock market, bought stocks worth Rs 33,700 crore in just 20 days

Foreign portfolio investors (FPIs) have invested about Rs 33,700 crore in the Indian stock markets so far this month. The main reason for this is the reduction in interest rates in the US and the strength of the Indian market. Depository data shows that this is the second-largest figure for FPI investment in Indian shares in a month so far this year. Earlier in March, FPIs had invested Rs 35,100 crore in the stock market.

VK Vijayakumar, Chief Investment Strategist, at Geojit Financial Services, said that the trend of FPI buying is likely to continue in the coming days. According to the depository data, foreign portfolio investors have made a net investment of Rs 33,691 crore in shares so far this month (till September 20). With this, their investment in shares so far this year has reached Rs 76,572 crore.

Continuous shopping since June

FPIs have been buying continuously since June. Earlier, in April-May, they had withdrawn an amount of Rs 34,252 crore from shares. FPIs are buying amid expectations of an interest rate cut by the US central bank Federal Reserve in September. After the Federal Reserve cut the key interest rate by 0.50 percent on September 18, FPIs have bought more aggressively. According to Robin Arya, Smallcase Manager, Founder, and Chief Executive Officer (CEO) of analyst company Golfify, the weakness in the US dollar and the stance of the Federal Reserve have made the Indian stock market attractive for FPIs.

Emerging markets like India become attractive for FPI.

Manoj Purohit, Partner and Leader-FS Tax, Tax, and Regulatory Services, BDO India, said that in addition, emerging markets like India remain attractive for FPIs due to balanced fiscal deficit, the impact of rate cuts on Indian currency, strong valuation, and RBI’s stance on controlling inflation. He said that apart from this, foreign funds are also positive towards the initial public offerings (IPOs) that came this year. Apart from shares, during the period under review, FPIs have invested Rs 7,361 crore in the debt or bond market through the Voluntary Retention Route (VRR) and Rs 19,601 crore through the Fully Accessible Route (FRR). VRR encourages long-term investment while FRR increases liquidity and access for foreign investors.