FPI: Rs 86,000 crore FPI inflows in July-Sept, highest since Dec 2020 quarter

Mumbai: A sharp increase in India’s weight in global indices, such as MSCI and FTSE, driven by the outperformance of Indian markets and the Fed’s rate cut in mid-September, prompted overseas investors to pump money into India in the September quarter. Foreign portfolio investors infused over ₹86,000 crore in July-September, the highest in 15 quarters. In the December quarter of 2020, these investors invested about ₹1.43 lakh crore in Indian stocks.

Flows from foreign funds into Indian equities were moderate in the first-half of 2024 on concerns over rich valuations and tight monetary policy in the US. With the dollar weakening following the rate cut in the US and India’s weight on global indices increasing, foreigners have increased their local holdings.

The MSCI India index has gained 26% this year, compared to a 13% gain in the MSCI Emerging Market index during this period. This outperformance has led to more Indian companies being added to both the MSCI EM and MSCI IMI indices while the weights of underperforming Chinese stocks have been reduced. In the widely-followed MSCI Emerging Market index, India’s weight has increased to 20.7%, compared to China’s 23.74%.

Foreigners have also been active in India’s primary market including IPOs. In 2024, FPIs invested over ₹65,000 crore in the primary market compared to ₹33,000 crore in the secondary market.