FPI Buying Continues In September With Rs 2,374 Crore Inflows

Foreign portfolio investors (FPIs) have continued their buying spree in Indian equities in September, with inflows of around Rs 2,374 crore in the first four days of the month. This extends the positive trend seen in July and August, indicating that foreign investors are becoming more consistent buyers of Indian stocks.

According to Dr V K Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, the cooling of the global chip trade has helped redirect some foreign capital towards India. FPI selling in semiconductor stocks in South Korea and Taiwan has also contributed to this trend.

India's stronger-than-expected economic performance is another factor supporting investor sentiment. The economy recorded a GDP growth of 7.8% in Q1 FY27, strengthening confidence in the domestic growth outlook. Better-than-expected first-quarter corporate earnings have also added to the positive sentiment surrounding the Indian stock market.

The recent recovery in the Indian rupee is another favourable factor for overseas investors. Large inflows through the FCNR(B) deposit scheme, which attracted around $127 billion, have helped strengthen the domestic currency. The rupee has appreciated from a low of 96.96 against the US dollar in May to 94.49 on September 4. A stable rupee makes Indian assets more attractive to FPIs by reducing the risk of currency-related losses.

However, the sustainability of foreign investment flows will depend heavily on global bond yields and US monetary policy. Dr Vijayakumar noted that the FPI flows will be primarily influenced by the bond yields, which are rising globally. The coming weeks will be crucial in determining whether the recent FPI recovery develops into a sustained trend.

The Indian stock market has been benefiting from the consistent FPI inflows, with the Sensex and Nifty indices reaching new highs. The strong economic performance and positive corporate earnings have also contributed to the market's upward momentum.

In the first half of November, foreign portfolio investors increased their holdings in Indian securities to a fourteen-month high. This trend is expected to continue, driven by the strong economic fundamentals and the attractiveness of Indian assets to overseas investors.

The FPI inflows in September have extended the strong foreign investment momentum from July and August. In October, FPIs had invested Rs 6,480 crore in Indian markets, after three months of outflows. The recent inflows have reinforced the positive sentiment surrounding the Indian stock market, and the trend is expected to continue in the coming weeks.

Overall, the continued FPI buying in September is a positive sign for the Indian stock market, driven by the strong economic performance, positive corporate earnings, and the attractiveness of Indian assets to overseas investors. However, the sustainability of foreign investment flows will depend on global bond yields and US monetary policy.

The strong FPI inflows in September have significant implications for the Indian economy and the stock market. The inflows are expected to continue, driven by the strong economic fundamentals and the attractiveness of Indian assets to overseas investors. This is likely to have a positive impact on the Indian stock market, with the Sensex and Nifty indices expected to reach new highs in the coming weeks.

In conclusion, the FPI buying in September is a continuation of the positive trend seen in July and August, driven by the strong economic performance, positive corporate earnings, and the attractiveness of Indian assets to overseas investors. The sustainability of foreign investment flows will depend on global bond yields and US monetary policy, and the coming weeks will be crucial in determining whether the recent FPI recovery develops into a sustained trend.