FIIs invest ₹14,064 crore in the Indian equity market this week, with buying expected to persist.

Foreign institutional investors (FIIs) have ramped up their buying this week, pouring ₹14,064 crore into the cash market as Indian markets demonstrate resilience amid strong economic performance, data released on Saturday revealed.

As of September 20, total FII investments reached ₹33,699 crore, bringing the year-to-date total to ₹76,585 crore, according to NSDL data.

Market analysts predict that this trend of FII buying will likely persist in the coming days.

Manoj Purohit from BDO India noted that the US Federal Reserve made its first interest rate cut in four years, reducing rates by a larger-than-expected 50 basis points. This move has led foreign portfolio investors (FPIs) to respond cautiously.

“The Indian markets have shown resilience, supported by strong fundamentals and positive GDP growth expectations,” said Purohit.

September recorded the second-highest inflows for 2024, following March. This influx of FII capital has strengthened the rupee by 0.4% for the week ending September 20, potentially encouraging further buying from FIIs, according to analysts.

Despite global uncertainties, factors such as balanced fiscal deficits, the impact of rate cuts on the Indian currency, strong valuations, and the Reserve Bank of India’s commitment to controlling inflation without cutting rates have made emerging markets like India attractive.

Additionally, this year’s IPOs have drawn significant foreign investment, making the Indian capital market an appealing destination for reallocating funds from riskier markets, analysts noted.

Attention now turns to the RBI and whether it will follow suit with a repo rate cut in October or hold off until December. A modest rate cut could help manage food inflation and address waning interest in household savings, which affects banks’ retail lending.

India’s monetary policy has remained relatively conservative, even in light of the Fed’s recent actions, Purohit added.