Foreign Investors Boost Indian Stock Market with Rs 57,359 Crore in September
Foreign portfolio investments in the Indian stock market have been positive for four consecutive months. This investment spree is due to a bull run in benchmark indices and recent monetary policy rate cuts in advanced economies, including the US.
In September alone, FPIs purchased stocks worth Rs 57,359 crore, with one trading session left on Monday. This amount is almost equal to the total investments made in the past three months combined.
Foreign Portfolio Investment (FPI) involves investors acquiring foreign financial assets. In June, July, and August, FPIs bought stocks worth Rs 26,565 crore, Rs 32,365 crore, and Rs 7,320 crore, respectively, according to the National Securities Depository Limited (NSDL).
The benchmark index Sensex has risen approximately 16% since the start of the current financial year. This growth is driven by strong GDP growth, controlled inflation, robust 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. In six of the nine months through September, FPIs were net buyers, according to NSDL data. These months were January, April, and May.
V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said that FPI buying has contributed to the stability of the Rupee this year. He added, “The September 18th rate cut and the dovish commentary by the Fed can be seen as a major pivot in interest rates. This could facilitate sustained inflows into emerging markets like India.”
Krishna Appala, Senior Research Analyst at Capitalmind Research, mentioned that with large-cap valuations remaining attractive and FIIs returning in force, the market outlook remains positive.
In 2023, Foreign Portfolio Investors (FPIs) also focused on India, becoming net buyers in the country’s stock market. They purchased stocks worth Rs 171,107 crore.
Doubts Revealed
Foreign Investors -: Foreign investors are people or companies from other countries who put their money into businesses or stocks in India to make a profit.
Rs 57,359 Crore -: Rs 57,359 Crore is a large amount of money. One crore is equal to 10 million, so this is 57,359 times 10 million rupees.
Foreign portfolio investments (FPIs) -: FPIs are investments made by people or companies from other countries in Indian stocks, bonds, or other financial assets.
Bull run -: A bull run is a period when the prices of stocks keep going up, making investors feel confident and happy.
Benchmark indices -: Benchmark indices are groups of important stocks that show how well the stock market is doing. In India, examples are the Sensex and Nifty.
Monetary policy rate cuts -: Monetary policy rate cuts are when central banks, like the Reserve Bank of India, lower interest rates to make borrowing cheaper and encourage spending and investment.
Sensex -: The Sensex is a major stock market index in India that tracks the performance of 30 well-established companies listed on the Bombay Stock Exchange (BSE).
GDP growth -: GDP growth means the increase in the value of all goods and services produced in a country, showing that the economy is getting bigger.
Inflation -: Inflation is when the prices of goods and services go up over time, making things more expensive.
Monsoon conditions -: Monsoon conditions refer to the rainy season in India, which is important for farming and the overall economy.