After months of continuous selloff since September 2024, foreign investors are making a strong comeback in the Indian stock market. This week alone, they have invested a massive $1.39 billion in equities—the highest inflow among Asian markets—according to a Bloomberg data. This shows that the foreign investors are getting easy with Indian equity valuations. However, some of the analysts remain skeptical about the sufficient factors to maintain this over a long run.
Since March 20, Foreign Institutional Investor(FII) have become net buyers of Indian equities, investing approximately $2.37 billion. This marks a shift from their previous trend, as they had offloaded over $28.18 billion since the end of September.
Country Wise Data
Taiwan experienced the highest capital outflow among Asian markets, with $298 million withdrawn, followed by Malaysia at $161 million and Thailand at $89 million. Vietnam and the Philippines also saw outflows of $32 million and $64 million, respectively. In contrast, India, along with Indonesia and South Korea, witnessed net inflows, attracting $158.3 million and $118 million, respectively.
What Boosted The Inflow
Reports suggest that Foreign Institutional Investors (FIIs) are showing more interest in Indian markets because of the Reserve Bank’s (RBI) Market stabilization efforts and the growing anticipation that the RBI will again reduce interest rates during its upcoming Monetary Policy Committee (MPC) review in April. Apart from this, Indian stock prices have become more appealing to investors after recent market correction. The correction has made the stock more affordable than previous. The report also hints that the US and Chinese markets are facing declines, whereas India is gaining traction as a preferred destination for global investors.
RBI’s Effort
With an aim to ease the ongoing cash deficiency in the banking system, Reserve Bank of India (RBI) has been pumping funds through various measures. Short term and long term repo auctions, currency swap deals, and buying government bonds to keep the cash flow smoothly are th major steps taken by the
