Despite FPIs inflow decline, net selling by DIIs this week, Indian markets post new highs

Foreign Portfolio Investment (FPI) in India witnessed a significant decline this week amid market volatility driven by concerns over possible interest rate cuts by the US Federal Reserve. According to data released by the National Securities Depository Limited (NSDL), the net FPI inflows into the Indian equity market for the current week stood at Rs 5,830 crore, sharply down from the Rs 16,881 crore recorded during the previous week (September 9 to September 13).

Domestic investors also showed a bearish trend this week, with significant selling pressure observed, particularly on Friday.

According to data from the depositories, net investment by domestic investors in equities turned negative, resulting in net selling of Rs 635 crore for the week. This shift into negative territory reflects a cautious approach by domestic investors as the markets are at all-time high.

Despite this week's slowdown in inflows, FPI investments remain positive overall and have continued to grow throughout September. So far, net FPI inflows for the month have reached Rs 33,691 crore. This sustained inflow suggests that foreign investors maintain confidence in the Indian market.

As per the data if the positive momentum in FPI inflows persists in the coming week, September could record the highest FPI investment in India for 2024, surpassing previous months' figures.

While the dip in weekly inflows reflects short-term caution, the overall outlook for foreign investment in India continues to be optimistic, with the equity market expected to benefit from steady foreign interest.

The consistent FPI inflows reflect the increasing attractiveness of Indian markets, driven by strong economic fundamentals, improving corporate earnings, and positive global sentiment towards emerging markets.

Earlier, the net foreign investment in August in the Indian equity market declined to Rs 7,322 crore, marking the lowest monthly investment in the past three months.

This drop is particularly stark when compared to July, where foreign portfolio investors (FPIs) had invested Rs 32,359 crore, according to data from the National Securities Depository Limited (NSDL).

As per the data by NSDL, throughout August, foreign investors were largely net sellers in the Indian equity market.