Foreign investors have pumped ₹11,730 crore into Indian equities
What's the story
Foreign portfolio investors (FPIs) have shown renewed interest in the Indian market, injecting a substantial ₹11,730 crore into Indian equities.
This surge in investment was primarily driven by positive signals from both domestic and global markets.
The recent inflow marks a significant turnaround from the previous week, which saw a net outflow of ₹14,794 crore.
With the latest movement, the net outflow stood at ₹3,064 crore for the month up until June 14.
Market conditions
Market stability and positive cues attract FPIs
VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, highlighted that, "after the roller coaster ride in the market in the first week of June, stability has returned to the market as indicated by the sharp fall in India VIX from 27 on June 4 to 12.82 on June 14."
The formation of the NDA government at the Centre for a third consecutive term, has raised expectations for continued policy reforms and economic growth.
Global impact
Global factors influencing FPI investment in India
On a global scale, lower-than-expected inflation numbers in the US have increased hopes for a rate cut this year.
These factors have spurred risk-taking among investors, boosting inflows into markets such as India.
In contrast, FPIs withdrew ₹25,586 crore from equities in May due to election uncertainties, and pulled out more than ₹8,700 crore in April, over concerns about changes to India's tax treaty with Mauritius and rising US bond yields.
Debt market
FPIs show interest in Indian debt market
Despite recent fluctuations in equity investments, FPIs have shown consistent interest in the Indian debt market.
They have invested over ₹5,700 crore in the Indian debt market so far this month.
Market experts believe that the long-term outlook for FPI flows into Indian debt is positive because of India's inclusion in global bond indices.
However, near-term flows are being impacted by global macroeconomic uncertainty and volatility.