FPI’s Pump Rs 22,766 Crore Into Indian Equities In December – How Will It Impact The Share Market?

Foreign investors have made a significant comeback to Indian share market, investing a net amount of Rs 22,766 crore in the first two weeks of December. According to media reports, this surge is largely driven by expectations of a rate cut by the US Federal Reserve, which has improved global liquidity and drawn capital into emerging markets like India. Notably, the Indian share market saw substantial outflows in previous months. Foreign Portfolio Investors (FPIs) had withdrawn a net amount of Rs 21,612 crore in November and a record-breaking Rs 94,017 crore in October.

How Will It Impact The Share Market?

Inflows from foreign investors inject fresh liquidity into the share market. Foreign investors typically focus on companies with strong growth potential, which can increase demand for their shares. This potentially leads to high value of their share. As a result, stock prices may rise, and the overall market might experience a significant boost in performance.

Additionally, the involvement of foreign investors brings diverse perspectives and investment strategies. This contributes to a more robust and balanced market ecosystem.

Meanwhile, a surge in foreign investment may strengthen the Indian Rupee, as foreign investors’ demand for Rupees to purchase Indian stocks increases. It’s an unsaid law that when the Rupee strengthens, imports become cheaper.

FPIs Trend This Year

Foreign investors sold the India listed shares worth Rs 94,017 crore in October. From June to September, they were net buyers, for four consecutive months. Given below is the table of the trend of foreign investment in India in 2024, so far.

This shows the inflows and outflows for each month, as well as the total inflow for the year so far.

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