Foreign Portfolio Investment in India Drops Amid Market Volatility
Foreign Portfolio Investment (FPI) in India saw a significant decline this week due to market volatility and concerns over potential US Federal Reserve interest rate cuts. According to data from the National Securities Depository Limited (NSDL), net FPI inflows into the Indian equity market fell to Rs 5,830 crore from Rs 16,881 crore the previous week.
Domestic investors also showed a bearish trend, with significant selling pressure observed, particularly on Friday. Net investment by domestic investors in equities turned negative, resulting in net selling of Rs 635 crore for the week. This shift into negative territory reflects a cautious approach by domestic investors as the markets are at an all-time high.
Despite the weekly dip, overall FPI inflows for September remain positive, reaching Rs 33,691 crore. This sustained inflow suggests that foreign investors maintain confidence in the Indian market. If the positive momentum in FPI inflows persists, September could record the highest FPI investment in India for 2024, surpassing previous months’ figures.
Earlier, net foreign investment in August in the Indian equity market declined to Rs 7,322 crore, marking the lowest monthly investment in the past three months. This drop is particularly stark when compared to July, where foreign portfolio investors (FPIs) had invested Rs 32,359 crore, according to NSDL data.
Doubts Revealed
Foreign Portfolio Investment (FPI) -: Foreign Portfolio Investment (FPI) is when people or companies from other countries invest money in India’s stock market. They buy shares of Indian companies to make a profit.
Market Volatility -: Market volatility means that the prices of stocks go up and down a lot in a short period. It can make investing risky because it’s hard to predict what will happen next.
US Federal Reserve -: The US Federal Reserve is like the central bank of the United States. It helps control the country’s money supply and interest rates to keep the economy stable.
Interest Rate Cuts -: Interest rate cuts mean that the central bank lowers the cost of borrowing money. This can make loans cheaper and encourage people and businesses to spend more.
Net FPI Inflows -: Net FPI inflows are the total amount of money coming into India’s stock market from foreign investors after subtracting the money that is leaving.
Rs 5,830 crore -: Rs 5,830 crore is a large amount of money. One crore is equal to 10 million, so Rs 5,830 crore is 5,830 times 10 million rupees.
Domestic Investors -: Domestic investors are people or companies from within India who invest in the Indian stock market.
Bearish Trend -: A bearish trend means that investors think the market will go down, so they sell their stocks to avoid losing money.
Overall FPI Inflows -: Overall FPI inflows are the total amount of money that foreign investors have put into India’s stock market over a certain period.
Rs 33,691 crore -: Rs 33,691 crore is another large amount of money. It means 33,691 times 10 million rupees.
