After heavy selling in october and November, foreign investors (FPI) have once again returned to the indian stock market. In the first two weeks of december, FPI has invested a net Rs 22,766 crore in the indian markets. This investment is inspired by the expectation of interest rate cuts by the US Federal Reserve and the policies of the reserve bank of india (RBI).
october withdrawal
In the last months, there was a lot of volatility in investment by FPI. In october, foreign investors withdrew a record Rs 94,017 crore from the indian stock market, which was the largest figure this year. After this, there was another sell-off of Rs 21,612 crore in November. Earlier in September, FPI investment reached a nine-month high of Rs 57,724 crore. This volatility was the result of uncertainty about global economic conditions and US interest rates.
Return of investment in December
According to depository data, till december 13, FPI has invested Rs 22,766 crore in the indian stock market. The possible cut in interest rates by the US Federal Reserve and the announcement of the reserve bank of india to reduce the cash reserve ratio (CRR) have again won the confidence of foreign investors.
Role of inflation and policy decisions
Investors' attitude in the indian market was also influenced by the reduction in Consumer Price Index (CPI) based inflation. Inflation was 6.21% in october, which came down to 5.48% in November. This improvement has raised hopes that RBI will cut he repo rate in its upcoming monetary policy review.
In recent months, a trend of foreign investors withdrawing money from the indian market and investing in china was seen. However, in december, foreign investors have given priority to the indian market. In fact, the steps taken by the RBI to increase liquidity and better inflation rate figures have become a center of attraction for investors in the indian market.
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