Foreign investors have gained confidence in the Indian equity market once again, injecting ₹8,500 crore this week. This new inflow of money comes at a time of reviving market sentiment and after months of high volatility and outflows during the last financial year.
Recent Inflows and Market Impact
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Foreign investors pumped ₹8,500 crore into Indian equities this week, marking a significant shift in market sentiment.
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The inflow has helped benchmark indices recover, with the Nifty index recently seeing a 6% rise following similar inflows in late March.
Drivers of the Investment
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The renewed interest from foreign investors is due to favorable stock valuations, a strengthening rupee, and favorable macroeconomic indicators.
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Better investor sentiment has been a direct consequence of such conducive conditions, which reversed the earlier trend of high outflows in the financial year.
Context: Foreign Portfolio Investment (FPI) volatility
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In spite of the recent inflows, the overall trend for FY 2024-25 has remained characterized by heightened volatility, as FPIs pulled out a record USD 15 billion for the year.
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The final large inflow, close to ₹31,000 crore in late March, helped stabilize the markets following months of outflows.
Market Outlook
Although the recent investments have infused a shot in the arm, the market is still cautious about changes in foreign investor sentiment and global economic conditions.
Experts advise close watching of FPI flows as the market may still remain susceptible to fluctuations.
Sources: The Shillong Times, Angel One