Ever since the US Central Bank has cut its interest rates, there has been a tremendous boom in the stock markets of America and India. The special thing is that foreign investors have created a record in the Indian stock market. On Friday, foreign institutional investors have made the biggest purchase in the Indian stock market in 3 years. They have spent more than 14 thousand crores rupees in the stock market in a single day. According to the provisional data of Friday, this is the biggest purchase in a day in the last 3 years. At the same time, historically, it is the eighth highest purchase. FIIs made the biggest purchase in a day on May 6, 2020. On that day, foreign investors had invested Rs 17,123 crore in the stock market in a single day.
Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said in a media report that the biggest reason for this purchase by FIIs is the 0.50 percent cut in interest rates by the Fed. Now the Fed rate is expected to fall steadily to 3.4 percent by the end of 2025. Bond yields in the US are continuously declining, prompting FIIs to invest in emerging markets like India. September has seen the second largest investment so far in 2024, the last time such a big investment was seen was in March 2024. The total FII investment till September 20 this month has come to Rs 33,699 crore. The total FII investment in India so far in 2024 has reached Rs 76,585 crore.
Manoj Purohit of BDO India said that despite global uncertainties, the main reasons for the attraction of foreign investors in India include balanced fiscal deficit, impact of rate cuts on Indian currency, strong valuation and RBI's approach to keep inflation under control without rate cuts. FIIs' buying spree is likely to continue in the coming days as well. Experts believe that in the current month, foreign investors can cross the figure of Rs 50 thousand crore in the Indian stock market.
Dr. Vijaykumar said in a media report that banking stocks have seen a rise after the news of reduction in the credit-deposit gap. In this overvalued market, banking stocks are currently at the right value, due to which the buying trend in banking stocks may continue, which may also lead to an increase in the index. There has been a flood of FII money. The Indian rupee rose by 0.4 percent for the week ended September 20, this may further boost FII buying. The worrying thing is that as the market heats up, valuations are also increasing.
