Foreign Investors Boost Indian Equity Markets
Positive FPI Inflows Driven by RBI Rate Cut
Foreign investors are showing renewed interest in Indian equities. Last week, they injected Rs 3,346.94 crore into the market. This surge came after the Reserve Bank of India (RBI) cut interest rates.
Initial Optimism and Subsequent Withdrawals
The RBI’s rate cut boosted investor confidence. From June 9 to June 13, strong foreign portfolio investor (FPI) inflows were seen. However, rising tensions between Israel and Iran affected market sentiment later in the week.
On Friday, FPIs withdrew Rs 3,275.76 crore from Indian equities. This reduced the week’s net investment. Despite this, the week still ended with positive inflows.
Impact of Global Conflicts on Investments
During global conflicts, investors often prefer safe assets like gold. This can lead to reduced investments in emerging markets, including India.
June’s Overall FPI Investment
Despite last week’s positive inflows, June’s overall FPI investment remains negative. So far, FPIs have withdrawn Rs 5,402 crore from Indian equity markets this month.
RBI’s Surprise Rate Cut
The RBI’s Monetary Policy Committee (MPC) announced a surprise 50 basis points rate cut on June 6. The repo rate decreased to 5.5%, which boosted investor confidence.
Previous Months’ FPI Trends
- May saw positive net FPI inflows of Rs 19,860 crore. It was the strongest month for foreign investment this year.
- FPIs sold shares worth Rs 3,973 crore in March.
- They also sold equities valued at Rs 78,027 crore in January and Rs 34,574 crore in February.
