Foreign investors have made good investments in October.
For the last 100 days, India’s stock market was facing indifference from foreign investors. But as soon as the festive season started. The resentment of the festive guests also ended. Such is the color of Indian festivals. Be it a local or a foreigner, it brings happiness on everyone’s faces and new enthusiasm in their hearts. Something similar was seen regarding the attitude of foreign investors towards the Indian stock market. FIIs were booking profits from the stock market for about 100 days. For about one to one and a half weeks in July, August, September and October, foreign investors had sold about Rs 80 thousand crores. But as Diwali approached. The mood of foreign investors also became better. Due to which, in the month of October, the foreign stocks were taking the market into minus. He is the one who brought it positive. In the month of October, foreign investors have invested about Rs 6,500 crore in the market. Let us also tell you how the mood of foreign investors changed in the month of October?
Festive buying by foreign investors
After continuous withdrawal for the last three months, foreign portfolio investors (FPIs) have infused a net Rs 6,480 crore into the Indian stock market so far in October. The main reason for this is strong macro economic factors. According to depository data, earlier FPIs had withdrawn Rs 23,885 crore in September, Rs 34,990 crore in August and Rs 17,700 crore in July. Fresh investment in October signals a significant shift in sentiment and reflects new confidence among global investors towards Indian markets. There are several major factors behind this reversal. However, in the current year, foreign investors have withdrawn Rs 1,48,040 crore from the stock market. On the other hand, in the bond market, FPIs invested around Rs 5,332 crore under the general limit and Rs 214 crore through the voluntary retention route this month (till October 17), indicating continued interest in Indian debt instruments.
Why increased trust?
According to Himanshu Srivastava, head, manager research, Morningstar Investment Research India, India’s macro base among emerging markets remains relatively strong. FPI confidence has increased due to stable growth, inflation under control and robust domestic demand. He further said that with global liquidity conditions gradually improving, a rate cut or at least a pause in the US is expected. As risk appetite returns, money is flowing into high-yield emerging markets. Additionally, Indian valuations, which were under pressure, have now become more attractive, reviving buying interest in dips.
That’s why there was a change in strategy
Expressing similar views, VK Vijayakumar, chief investment strategist at Geojit Investments, said the main reason for this change in FPI strategy is the narrowing of valuation gap between India and other markets. He said that India’s low performance in the last one year has now opened the possibility of better relative performance. Wakarjaved Khan, senior fundamental analyst at Angel One, said the latest investment inflows could also be driven by the reduction in trade tensions between the US and India. He said the selling pressure seen in early 2025 has made the valuation multiples of Indian stocks more attractive compared to global peers. Experts believe that future trade developments and the coming weeks from the ongoing quarterly results session will play an important role in determining the direction of FPI flows.