FPIs invested a record Rs 54,727 crore in Indian equity and debt markets in July, enthused by the country's positive growth outlook for FY2025.
An economic survey released last week before the Union Budget pegged the growth rate for the country at 6.5% to 7% for 2024-25.
Data provided by NSDL said FPIs invested Rs 32,364 crore in equity and Rs 22,363 crore in debt in July.
Year-to-date, the FPI investment in equity stood at Rs 35,565 crore in the country.
The sharp inflow of funds was attributed to three key factors: India's relative economic outlook, rate cuts, and fiscal discipline by the government by market experts.
Experts commented, "FII investments into India are likely to increase for the following reasons: first, the country's economic performance is outshining that of many global peers, making it an attractive market for investments. Second, with risk-free rates in the USA likely to come down, investors would look for better returns elsewhere, including India. Finally, the Union government's sound fiscal management might prompt rating agencies to upgrade their scores on India, thus improving its investment appeal."
FPI activity would therefore hinge on the performance of the global equity market, dollar index movement, geopolitical events and investment opportunities available in India despite its relatively high valuation levels.
"The recent spurt of investments can be attributed to a stable political climate, ongoing economic reforms and attractive market valuations within India," said another expert.
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