FPIs have shown strong interest in the Indian market, reflecting the market’s resilience amid global uncertainties.
“The latest US employment data points to a slowdown in the US economy, which in turn has raised expectations of a rate cut by the Fed in September, possibly by as much as 50 basis points. The resulting decline in US 10-year bond yields to 3.73 per cent will be positive for FPI inflows into emerging markets like India,” said Dr VK Vijayakumar, chief investment strategist, Geojit Financial Services.
However, Vijayakumar warned that inflated valuations remain a concern.If US growth concerns impact global equity markets in the coming days, FPIs are likely to take advantage of the buying opportunity in India.
FPI flows are driven by a variety of factors apart from inclusion in bonds. Some of the major factors influencing investment decisions include geopolitical developments, health of the US economy, yen borrowings and general risk-off strategies. Also, is October likely to be the record date for RIL’s bonus shares? Here’s what the data suggests:
“Global market sentiment has clearly shifted towards caution, as evidenced by the 25% drop in Nvidia’s share price after hitting an all-time high in June. Concerns over a potential recession in the US and ongoing economic challenges in China are key considerations for investors re-evaluating their investment allocations,” believes Sunil Damania, Chief Investment Officer at MojoPMS.
Damania added that emerging markets may see a slowdown in FPI inflows if risk-averse strategies continue to gain traction.
FPIs are considered crucial as they increase market liquidity and bring in vital capital inflows that support economic growth and stability. Moreover, they also contribute to market efficiency and reflect international confidence in a country’s financial system.
(Disclaimer: The recommendations, suggestions, views and opinions expressed by the experts are their own. They do not represent the views of The Economic Times)
