Foreign portfolio investors (FPIs) have been the talk of the Indian stock market this September, having funded nearly ₹33,300 crore in domestic equities. This is the second-highest inflow of the month of 2024, just behind the ₹35,100 crore seen in March. And you know what? There’s still one trading week remaining in the month!
Who is driving the inflows?
The large investment from foreign investors is largely driven for a possible interest rate cut by the US Federal Reserve. This optimism was supported on September 18 when the Fed announced a larger-than-expected rate cut of 50 basis points.
The Indian market’s stability and its strong momentum despite global suspense have also attracted considerable interest from FPIs.
Sectoral analysis
Financial Services
After two months of heavy selling, FPIs turned into net buyers in the financial services sector. Between September 1 and 15, they invested ₹12,253 crore, a sharp difference from outflows of ₹12,008 crore in August and ₹7,648 crore in July.
Healthcare
The healthcare sector stays favoured, with FPIs investing ₹3,652 crore in the first fortnight of September. This was followed by ₹5,831 crore in August and ₹5,054 crore in July.
Real estate and consumer durables
The real estate sector saw investments of ₹2,903 crore, whereas the consumer durables sector saw investments of ₹2,226 crore between September 1 and 15.
Capital goods and energy
FPIs invested ₹1,778 crore in the capital goods sector and ₹1,672 crore in the oil, gas and consumable fuels sector.
Telecom and FMCG
The telecom sector received ₹1,699 crore in the first half of September, and the fast-moving consumer goods (FMCG) sector noticed inflows of ₹1,372 crore. The power sector saw inflows of ₹1,167 crore.
Sectors facing outflows
Not all sectors are seeing positive inflows. From September 1 to 15, FPIs continued to reduce their holdings in the automobile and auto components, metals and mining, and construction materials sectors.
- Automobiles and auto components: Outflow of ₹1,983 crore followed by outflow of ₹2,379 crore in August.
- Metals and Mining: Outflow of ₹1,857 crore followed by significant outflow of ₹3,773 crore last month.
- Construction materials: Outflow of ₹393 crore in the first half of September.
Conclusions
The Indian stock market has shown great stability and continues to attract considerable foreign investment. With still one trading week left in September, it will be fascinating to see if investments exceed March figures. The diverse investments highlight the diverse options that FPIs see in the Indian market.
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Disclaimer
The information presented in this article is intended for general informational purposes only. It should not be construed as financial or investment advice. Always consult with a qualified financial advisor before making any investment decisions. The authors and publishers are not responsible for any actions taken based on this information.
