FPI investment in Indian stocks remained in positive territory for the fourth consecutive month

By News Update On Sep 29, 2024

Foreign portfolio investment in the Indian stock market remained positive for the fourth consecutive month. This investment spree can be attributed to the rise in benchmark indices and recent monetary policy rate cuts in advanced economies including the US.

The pace of buying has increased in September, with FPIs buying shares worth Rs 57,359 crore so far, with one trading session left on Monday. These purchases are almost equal to the total investments made in the last three months. By definition, foreign portfolio investment (FPI) involves investors acquiring foreign financial assets.

According to National Securities Depository Limited (NSDL) data, FPIs bought shares worth Rs 26,565 crore, Rs 32,365 crore and Rs 7,320 crore in June, July and August, respectively. The benchmark index Sensex has gained nearly 16 per cent since the beginning of the current financial year, led by strong GDP growth, controlled inflation, strong domestic liquidity and favorable monsoon conditions. FPI activity in recent months was also influenced by the smooth formation of the new government following the election results. NSDL data showed that FPIs were net buyers in six of the nine months to September. These months were January, April and May. VK Vijayakumar, chief investment strategist at Geojit Financial Services, said FPI buying has contributed to the stability of the rupee this year. Vijayakumar said, “The interest rate cut on September 18 and the dovish commentary by the Fed can be seen as a major turning point in the interest rates. “This could encourage continued inflows into emerging markets like India.” Krishna Appala, senior research analyst at CapitalMind Research, said with large-cap valuations remaining attractive and the return of FIIs, the market outlook remains positive. Foreign portfolio investors (FPIs) also focused on India in 2023 and became net buyers in the country's stock market. He bought shares worth Rs 171,107 crore.