FPIs showed strong interest in the Indian market, reflecting the country’s resilience amid global uncertainty.
“The latest US jobs data suggests the US economy is slowing, which has raised expectations of a Fed rate cut in September, possibly by 50 basis points. The resulting decline in US 10-year Treasury yields to 3.73% is positive for FPI inflows into emerging markets like India,” said Dr VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
However, Vijayakumar cautions that high valuations remain a concern. If US growth concerns continue to weigh on global equity markets in the coming days, FPIs are likely to capitalise on the opportunity to buy in India.
FPI flows are influenced by a variety of factors beyond bond inclusion. Key factors influencing investment decisions include geopolitical developments, the health of the U.S. economy, yen borrowing, and prevailing risk aversion strategies.Also Read: Is RIL Bonus Share Record Date Likely to Be October? Here’s What the Data Says
“Global market sentiment has shifted to a particularly cautious direction, as evidenced by the 25% decline in Nvidia since hitting an all-time high in June. Concerns about a potential U.S. recession and ongoing economic difficulties in China are key considerations for investors as they reassess their allocations,” said Sunil Damania, chief investment officer at MojoPMS.
Damania added that if risk-off strategies continue to gain traction, FPI inflows from emerging markets could slow.
FPIs are considered vital because they enhance market liquidity and provide essential capital inflows that support economic growth and stability. They also contribute to market efficiency and reflect international confidence in a country’s financial system.
(disclaimer: Recommendations, suggestions, views and opinions expressed by experts are their own and do not necessarily represent the views of the Economic Times.)
