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The Indian stock market witnessed a significant surge in foreign portfolio investor (FPI) interest this week, as FPIs injected a substantial Rs 16,800 crore into equities, bringing the total investment for the month to Rs 27,856 crore (as of September 13). This trend marks a notable shift from previous weeks, when FPIs were primarily focused on primary market investments. This week, however, they actively participated in the exchange market, signaling a renewed confidence in the Indian market.
The shift in FPI strategy from selling to buying can be attributed to several factors. A growing consensus among market analysts suggests that the Federal Reserve (Fed) will initiate interest rate cuts this month, leading to a decrease in US yields. This scenario is conducive to capital flows from the US to emerging markets, including India. Coupled with this, the Indian market's strong resilience and momentum have further fueled FPI enthusiasm. The argument is that FPIs cannot afford to miss out on the growth trajectory of the Indian market, especially given its robust performance.
Experts like Manoj Purohit, Partner and leader, FS Tax, Tax and Regulatory Services, BDO India, attribute this shift in the investment wave to the Indian equity market reaching new all-time highs. He highlights the underlying factors driving these robust inflows, including global confidence in India's economic outlook and the government's commitment to fostering long-term growth. This optimism is reinforced by the positive market sentiments, political stability, and the attractiveness of Indian equities, all contributing to the ongoing rally.
Further bolstering FPI confidence is the market regulator's proactive approach to streamlining business norms and addressing industry concerns. The regulator's commitment to implementing global best practices and creating a competitive environment has made India a preferred destination for foreign funds seeking attractive returns. This combination of factors distinguishes India as a desirable investment haven compared to other developing economies.
The recent influx of FPI investment not only reflects the growing attractiveness of the Indian stock market but also underscores the enduring confidence foreign participants have in India's financial markets. This confidence has persisted even during periods of geopolitical crises and other macro-economic challenges. The combination of strong fundamentals, a supportive regulatory environment, and a robust growth trajectory positions India as a promising investment destination, attracting significant foreign capital.
Source: FPIs Go Bullish Again On Buying Equities In Indian Market