Indian stock markets opened September on a strong note, supported by robust investments from foreign investors during the first week of the month.

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According to data from the National Securities Depository Limited (NSDL), Foreign Portfolio Investors (FPIs) made net investments totaling Rs 10,980 crore during the first week of September. However, on Friday, FPIs registered a net selling of equities amounting to Rs 904.19 crore.

This shift was largely attributed to the fact that Friday marked the final day of the Securities and Exchange Board of India's (SEBI) deadline for unregistered FPIs to disclose their beneficial owners.

As per SEBI, it mandated that all foreign investors provide details of their ultimate beneficial owners by this deadline, failing which they would be disqualified from investing in Indian markets. FPIs that did not comply with this regulation would be required to wind up their existing investments.

"The domestic market was in panic due to the SEBI's deadline over FIIs disclosure norm, however, this is not expected to impact India's lucrativeness to FIIs in the long-term. Coupled with a lack of new market catalysts and elevated valuations, a muted trend is expected to continue in the short term," said Vinod Nair, Head of Research, Geojit Financial Services.

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.

The data also highlighted that the foreign investors during the last week of August (Aug 26 to 30) made a record net investment in the equity market of Rs 23,585.92 crore, which turned the overall investment in the August month positive.

FPIs, which involve investors acquiring foreign financial assets, play a significant role in influencing market dynamics by channelling substantial funds into the Indian equity market.