FIIs’ single-day buying of Rs. 14,000 crore at a 3-year high. Is the Fed turning foreigners into voracious buyers?

Encouraged by the Fed’s jumbo rate cut of 50 basis points, a drop in US weekly jobless claims and a FTSE rebound, foreign investors on Friday poured cash into the cash market at Rs. 14,064 crore worth of shares was his biggest single-day purchase in the last 3 years.

Friday’s provisional data showed it was the highest single-day buying in three years and eighth in history. The highest single-day buying by FIIs took place on May 6, 2020, when foreigners on Dalal Street bought Rs. 17,123 crore jumped.

“The trigger for this aggressive buying by FIIs was the 50 bp rate cut by the Fed on the 18th, which is considered a major Fed pivot, signaling the start of a rate-cutting cycle. The Fed rate is expected to continue to decline to 3.4% by end-2025.” Bond yields in the US continue to fall, forcing FIIs to invest in emerging markets like India,” Dr. said VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

September 2024 saw the second-highest inflow ever, the last coming in March 2024. Total FII investment this month till 20th September was Rs. 33,699 crore, taking the total FII investment in India by 2024 to Rs. 76.585 crores. .

Despite global uncertainties, the primary factors that make emerging markets like India the sweet spot are a balanced fiscal deficit, the impact of rate cuts on the Indian currency, strong valuations and the RBI’s approach to keeping inflation under control without rate cuts, said Manoj Purohit. BDO India.

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The FII buying trend is likely to continue in the coming days as well.

“Banking stocks have become attractive after the news of reduction in credit-deposit gap. This is fair value of banking stocks in an otherwise overvalued market, hence the buying trend in banking stocks may continue which may also push the index higher. Flood of FII money in INR for the week ended 20th September Up 0.4%, overheating the market and dragging valuations.

After meeting long-only and hedge fund investors in the US, Seshadri Sen, head of research and strategist at MK Global, said investors who had been waiting on the sidelines are now ready to look at India more constructively.

“Many feel that India will be an essential participant in any EM rally triggered by a Fed easing cycle. Valuation concerns still remain, but there is a belief that India’s improved macro stability and continued earnings growth are supporting these rich earnings multiples. Index – Willingness to adopt bottom-up stock-picking ideas over anchoring strategies,” Sen said.

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