2024-09-28 12:36:37
Foreign Portfolio Investments (FPIs) continued to double down on Indian equities post U S Fed’s 50 basis points interest rate cut on September 18, injecting as much as ₹ 57,359 crore till September 27.
This was the highest net monthly FPI inflows this calendar year, taking the overall inflows so far in 2024 to ₹1,00,245 crore (about $12 billion), depositories data showed.
The year-to-date inflows from FPIs is however much lower than the ₹ 1.63 lakh crore that has come in through domestic flows via Systematic Investment Plans (SIPs) in mutual funds.
FPI net equity inflows of ₹57,359 crore in September 2024 is much higher than August 2024 inflows of ₹7,322 crore. In July 2024, the net FPI inflows was ₹32,359 crore, while it was ₹26,565 crore in June 2024. In April and May 2024 FPIs had net sold equities worth ₹8,671 crore and ₹ 25,586 crore respectively.
India recently displaced China as the largest MSCI Emerging Market per MSCI IMI (Investible Large, Mid and Small cap) whilst China’s weight has fallen by a half since peaking in early 2021.
India’s weight in EM benchmarks has more than doubled in last three years. India’s equity markets continued to stand out as the consistent strong performer over the short and long term.
V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services:“The strong FII buying witnessed this month continued for the week ending on September 27, too. FPIs have invested ₹57359 crores so far in September with investment through the exchanges alone touching ₹ 46480 crores”.
He highlighted that total net FPI investment of ₹1,00,245 crore so far in 2024 has contributed to the stability of INR this year.
“The September 18th rate cut and the dovish commentary by the Fed can be seen as a major pivot in interest rates. This can facilitate sustained flows to emerging markets like India”, Vijayakumar said.
However, a recent trend is the big inflows into the Hong Kong market which was the star performer in September with the Hang Seng index gaining a whopping 14 per cent, he noted.
The monetary and fiscal stimulus being implemented by China is expected to stimulate the Chinese economy and the Chinese stocks listed in the Hong Kong market.
“If the outperformance of Hang Seng continues, it is possible that more funds will flow to Hong Kong since that market continues to be very cheap”, Vijayakumar said.
Manoj Purohit, Partner and leader, FS Tax, Tax and Regulatory Services, BDO India “This week witnessed the Sensex marking at all time high record levels , all thanks to the FPI fraternity making net positive inflows in the equity segment.The last week’s fed rate cuts have increased the liquidity in the Indian markets since the Indian rupee got aided by currency fluctuations. This interest rate differential is expected to attract more FPI inflows into India.”
Purohit said that SEBI also added an icing on the cake to lure investors by establishing a dedicated Foreign Portfolio Investor (FPI) Outreach Cell, aimed at direct engagement with foreign investors.
The Cell will provide guidance to prospective FPIs during the pre-application stage, including assistance with documentation and compliance processes. It will be offering support during the onboarding phase and resolving any operational challenges that may arise during the registration process or thereafter.
“All eyes now on the upcoming SEBI Board Meeting on September 30 which may bring up such fees and more such announcements which will reflect the government’s intention of making India a transparent, flexible, and easy to trade platform for offshore investors”, Purohit added.
Vinit Bolinjkar, Head of Research- Ventura Securities, said that FPIs continued their inflows during the first four days of the current week, investing ₹15,122 crore, buoyed by the recent Fed rate cut.
DEBT MARKETS
FPIs net investments in debt markets in September (till 27th) was little over ₹22,000 crore. So far this calendar year, FPIs have pumped in about ₹1,42, 000 crore (P about $17 billion), depositories data showed.
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