Foreign investors have injected over $4 billion into Indian markets since June, reversing the downturn witnessed in April and May, according to Bloomberg data. This surge in foreign buying follows a period of investor apprehension over continuity in India’s policy landscape, spurred by the lackluster performance of Prime Minister Narendra Modi’s party in the June 4 elections.
Market analysts and India bulls are buoyed by these developments, citing robust economic fundamentals and strong corporate earnings as insulating factors against political uncertainties stemming from the recent elections. Coupled with strong domestic investments, this resurgence in foreign interest has propelled the benchmark NSE Nifty 50 index to achieve unprecedented highs, marking a bullish sentiment towards India’s economic trajectory.
“India remains a standout among global markets, offering consistent growth prospects largely shielded from global economic fluctuations,” remarked Deepak Jasani, Head of Retail Research at HDFC Securities in Mumbai. He emphasized that potential rate cuts by the central bank could further enhance the attractiveness of Indian equities for foreign investors, potentially triggering larger inflows.
The appeal of Indian stocks has been amplified by a tentative economic recovery in China and mounting geopolitical uncertainties surrounding elections in Europe and the US. Alongside returning foreign capital, domestic institutional investors, including mutual funds and insurance companies, have injected a substantial $28 billion into the market this year, contrasting sharply with the modest $1.5 billion inflow from global funds largely attributed to June’s resurgence.
In summary, the influx of foreign investments, coupled with robust domestic flows, underscores growing confidence in India’s economic resilience and policy stability amid global uncertainties.
