This week (August 19-23), foreign investors made a significant comeback in the Indian stock market.
According to data from the National Securities Depository Ltd (NSDL), foreign investors made net purchases of shares worth ₹4,897.16 crore. This is a significant change from the previous week (August 12-17), when foreign portfolio investors were net sellers, selling shares worth ₹7,769.73 crore.
Despite this week’s positive flows, the overall net investment by foreign investors in August remains negative. So far this month, foreign investors have sold equities worth ₹16,305 crore in the Indian market.
This trend highlights the fluctuation in foreign investment pattern during the month. Interestingly, foreign investors were net sellers in August, while domestic investors played a key role in supporting the Indian stock market. According to official data from the National Stock Exchange (NSE), domestic investors have consistently bought Indian stocks, purchasing equities worth ₹47,080.38 crore in August.
This strong domestic participation has provided stability to the market amid fluctuating trends in foreign investment. “It is essential for policymakers to continue to foster an environment that encourages domestic investment while at the same time ensuring that foreign investors remain an integral part of the market.
Balancing the interests of domestic and foreign investors will be key to sustaining growth and stability in the Indian stock market. “From 6.6 per cent in December 2012, India’s share in the MSCI EM index is projected to exceed 20 per cent in August 2024,” said banking and market expert Ajay Bagga. Earlier in July, net foreign investment in the Indian stock market reached ₹32,365 crore as foreign investors were net buyers, data from the National Securities Depository Ltd (NSDL) showed.
This reflects a continuation of strong foreign interest after June, when foreign portfolio investors (FPIs) bought Indian stocks worth ₹26,565 crore on a cumulative basis.
FPIs, which comprise investors acquiring foreign financial assets, play a vital role in influencing market dynamics by bringing substantial funds into the Indian equity market.
