Since the US central bank cut its interest rates, there has been a tremendous surge in the US and Indian stock markets. What is special is that foreign investors have created records in the Indian stock market. On Friday, foreign institutional investors made the largest purchase in the Indian stock market in three years. They have spent over Rs 14,000 crore in the stock market in a single day. According to provisional data on Friday, this is the largest single-day purchase in the last 3 years. If we look at it historically, the eighth highest purchase is there. FIIs made the largest single-day purchase on May 6, 2020. On that day, foreign investors had invested Rs 17,123 crore in the stock market in a single day.
How much has been invested in a month?
Dr VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said in a press report that the main reason for this buying by FIIs is the 0.50 per cent cut in interest rates by the Federal Reserve. The Fed rate is now expected to fall continuously to 3.4 per cent by the end of 2025. Bond yields in the US are continuously declining, which is motivating FIIs to invest in emerging markets like India. September 2024 saw the second-largest investment so far; the last time such a large investment was seen was in March 2024. This month, till September 20, the total FII investment stood at Rs 33,699 crore. The total FII investment in India so far in 2024 has reached Rs 76,585 crore.
Why did investors collapse?
Manoj Purohit of BDO India said that despite global uncertainties, the main reasons for attracting foreign investors to India are balanced fiscal deficit, impact of rate cut on Indian currency, strong valuations and keeping inflation under control without a rate cut, according to the RBI’s view. The buying process by FIIs is likely to continue in the coming days as well. Experts believe that in this month, foreign investors may cross the Rs 50,000 crore figure in the Indian stock market.
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rise in bank stocks
Dr Vijayakumar said in the media report that after the news of the narrowing of the gap between credit and deposits, there has been a surge in banking stocks. In this overvalued market, banking stocks are currently at the right value, so the trend of buying bank stocks may continue, due to which the index may also rise. There is a flood of FII money. The Indian rupee appreciated by 0.4 per cent during the week ended September 20, which may further boost FII buying. The worrying thing is that as the market heats up, valuations are also rising.
