Foreign Portfolio Investors (FPIs) continued their aggressive buying in the Indian stock market for the fourth consecutive month in September, buoyed by the US Federal Reserve’s bold 50 basis point interest rate cut. This sustained buying spree marked a significant boost for domestic equities.
According to data from the National Securities Depository Ltd. (NSDL), FPIs injected Rs 57,724 crore (approximately $6.89 billion) into Indian stocks during September. This surge brought the total FPI investments in Indian equities to Rs 89,717 crore during the first half of the financial year 2024-2025 (H1FY25).
Sectoral Focus of FPI Inflows
Much of the FPI inflows were directed towards financial stocks. FPIs injected Rs 27,200 crore into the Financial Services sector in September, a stark reversal from the net outflows of Rs 12,008 crore in August and Rs 7,648 crore in July. This capital infusion contributed to a rise of over 3% in the Bank Nifty index during September.
The Healthcare sector also witnessed robust FPI interest, with inflows of Rs 6,639 crore in September. This followed significant inflows of Rs 5,831 crore in August and Rs 5,054 crore in July. Real Estate continued to attract attention, securing RS 5,375 crore in FPI inflows during the month.
Other key sectors benefiting from FPI activity included Fast-Moving Consumer Goods (FMCG), which saw inflows of Rs 4,900 crore, and Capital Goods, attracting Rs 4,002 crore. Consumer Durables and Telecommunication sectors also saw solid inflows of Rs 3,736 crore and Rs 1,935 crore, respectively.
FII Selling Trends in Certain Sectors
Despite the overall bullish trend, certain sectors experienced FPI outflows in September. The Consumer Services sector saw FPIs withdraw Rs 2,940 crore, making it the hardest-hit sector during the month.
Similarly, the Automobile and Auto Components sector witnessed significant outflows, with FPIs pulling out Rs 2,106 crore in September, following outflows of Rs 2,379 crore in August.
The Information Technology (IT) sector also experienced FPI selling pressure, with net sales of Rs 1,219 crore in September. This marked a sharp reversal from the Rs 4,036 crore in net inflows recorded in August.
Shift in October
However, the trend shifted in October, as FPIs began withdrawing funds from the Indian equity market. In the first week of October, FPIs sold off Rs 27,142 crore, reversing the bullish sentiment observed in the previous months.
Impact on Benchmark Indices
The strong inflow of Foreign Portfolio Investors (FPIs) in September had a significant impact on India’s benchmark indices, pushing them to record levels. On September 27, the Sensex surged to an all-time high of 85,978.25 points, while the Nifty 50 hit a peak of 26,277.35, driven by sustained FPI buying.
However, the momentum sharply reversed in October. During the October expiry, the Nifty 50 plunged nearly 1,500 points, hitting a low of 24,694.35 on October 7. The Sensex also faced a major correction, wiping out over 5,200 points from its September high, reflecting the volatility in the market as FPIs reversed their stance.
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