Foreign portfolio investors (FPIs) have invested Rs 57,359 crore in Indian equities this September, marking the highest inflow in nine months. This surge was largely driven by a recent rate cut by the US Federal Reserve.
With this latest infusion, FPI investments in Indian equities have surpassed the Rs 1 lakh crore mark for 2024, according to data from the depositories.
As of September 27, FPIs had made a net investment of Rs 57,359 crore in equities, the highest since December 2023 when they invested Rs 66,135 crore. Since June, FPIs have consistently bought equities after withdrawing Rs 34,252 crore during April and May. Overall, FPIs have been net buyers in 2024, with the exception of January, April, and May.
Several factors have contributed to this recent surge in FPI inflows, including the initiation of the U.S. interest rate cut cycle, an increased weightage for India in global indices, better growth prospects, and a series of large initial public offerings (IPOs), explains Himanshu Srivastava, Associate Director at Morningstar Investment Research India.
The 50 basis points rate cut by the US Fed on September 18 has enhanced liquidity in Indian markets, aided by favorable currency fluctuations. This interest rate differential is expected to attract further FPI inflows into India, noted Manoj Purohit, Partner at BDO India.
In terms of FPI inflows, the Hong Kong market led in September, with the Hang Seng index rising 14 percent. Analysts anticipate that China’s monetary and fiscal stimulus will boost its economy, benefiting Chinese stocks listed in Hong Kong.
In the debt markets, FPIs invested Rs 8,543 crore through the Voluntary Retention Route (VRR) and Rs 22,023 crore via the Fully Accessible Route (FRR) in September.