FPIs pump Rs 33,700 cr in equities in Sep amid US rate cut, domestic market resilience

New Delhi: Foreign investors have put nearly Rs 33,700 crore into Indian stocks this month, mainly because of the US interest rate reduction and the strength of the Indian market. This also represents the second highest amount of money coming in during a month this year, the previous one being in March, when Foreign Portfolio Investors (FPIs) pumped Rs 35,100 crore into the market, according to data from the depositories.

In the future, FPIs are expected to keep buying, according to V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services. As per information from depositories, Foreign Portfolio Investors made a net equity investment of Rs 33,691 crore by September 20 this month. So far this year, FPIs have invested Rs 76,572 crore in equities. Starting from June, foreign portfolio investors have been continuously purchasing stocks. Prior to that, they withdrew Rs 34,252 crore in April-May. During September, foreign portfolio investors (FPIs) continued to show optimism by buying Indian stocks in anticipation of a rate cut by the US Federal Reserve, with their buying activity becoming even more aggressive following a rate cut on September 18.

The reason for the FPIs' sudden increase in buying was the US Federal Reserve's decision to cut rates by 50 basis points on September 18, seen as a significant change in Fed policy starting a series of rate cuts. It is anticipated that the Fed rate will steadily decrease to 3.4 per cent by the end of 2025. Vijayakumar mentioned that as bond yields in the US continue to drop, foreign portfolio investors (FPIs) are being encouraged to put their money into developing markets such as India. Indian equities are becoming more attractive for global markets due to the weakening US dollar and the dovish stance of the Federal Reserve. The appreciation of the rupee demonstrates trust in India's stability, though it may pose a threat to the export industry, stated Robin Arya, who serves as the smallcase Manager and Founder & CEO at research.