FPIs invest ₹6,480cr in Indian equities this October
What's the story
After a three-month-long withdrawal streak, foreign portfolio investors (FPIs) have made a comeback by investing ₹6,480 crore in Indian equities this October. The move comes as a breath of fresh air after FPIs had pulled out over ₹76,000 crore between July and September. The new investment indicates renewed confidence in India's economy amid improving global financial conditions.
Market appeal
Factors driving FPI inflows
India's steady growth and manageable inflation are making it stand out among emerging markets. Himanshu Srivastava from Morningstar Investment Research India, said the country's macroeconomic stability is relatively strong among emerging markets. He noted that global liquidity conditions are gradually easing with expectations of rate cuts or at least a pause in the US.
Market dynamics
Easing trade tensions and reduced valuation differential
The attractiveness of Indian equities, which were under pressure earlier, has also prompted renewed "dip-buying" interest. Geojit Investments Chief Investment Strategist VK Vijayakumar said the main reason for this shift in FPIs' strategy is the reduced valuation differential between India and other markets. Vaqarjaved Khan, Senior Fundamental Analyst at Angel One, noted that easing trade tensions between the US and India have improved investor sentiment toward Indian equities.
Market forecast
Looking ahead: Key factors to watch
Looking ahead, the experts believe that future trade developments and the ongoing earnings season shall play a key role in determining the direction of FPI flows in the coming weeks. Despite recent inflows, FPIs have withdrawn some ₹1.5 lakh crore so far this year. In the debt market, FPIs invested around ₹5,332 crore under the general limit and ₹214 crore through voluntary retention route this month (till October 17), suggesting continued interest in Indian debt instruments.