The US interest rate cut and the strength of the Indian market have attracted foreign investors, who have invested close to Rs 33,700 crore in Indian shares thus far this month. Based on depositories’ data, this is the second-largest monthly inflow for 2024; the biggest was in March when FPIs invested a total of Rs 35,100 crore.
According to data, FPIs invested Rs 33,691 crore in Indian stocks until September 20. With foreign portfolio investors (FPIs) having invested a total of Rs 76,572 crore in Indian equities so far this year, this signifies the continuation of a healthy trend for foreign investments. Since June, the buying trend has continued unabated, with net outflows of Rs 34,252 crore in April and May.
The US Federal Reserve’s September 18 rate reduction—which was anticipated and resulted in a 50 basis point increase in interest rates—boosted inflows in September.
Considered a pivotal moment, this action initiated a cycle of rate-cutting that is predicted to bring the US Federal Reserve rate down to 3.4% by the end of 2025. FPIs are focusing increasingly on emerging economies, like India, where returns seem more appealing due to declining US bond yields.
FPIs spent Rs 19,601 crore through the Fully Accessible Route (FRR), which aims to improve liquidity and access for foreign investors, and Rs 7,361 crore in Indian debt through the Voluntary Retention Route (VRR), which encourages long-term investments, in addition to stocks.
As of September 20, the total foreign institutional investment (FII) in Indian stocks for September was Rs 33,699 crore. With this, FPI investments in Indian stocks will total Rs 76,585 crore by 2024. It is anticipated that the US rate decrease along with falling bond yields will stabilize capital inflows into emerging economies such as India, thereby enhancing the nation’s appeal to outside investors.
