Mumbai: The Reserve Bank of India’s (RBI) decision to cut interest rate by 50 basis points and the growing possibility of a delay in interest rate hike by the US Federal Reserve have led to a reversal of foreign fund flow into the domestic equity market.
In October till date, foreign portfolio investors (FPIs) have turned net buyers of equities worth Rs 1,600 crore. This, according to market experts, could be the beginning of a trend reversal in foreign fund flows into the Indian market.
“The surprise cut in interest rate by RBI and hope that the US Federal Reserve would delay its interest rate hike have improved sentiments. Moreover, Prime Minister Narendra Modi’s interaction with top CEOs during his recent visit to the United States has also raised optimism regarding fresh investment in India by global business houses especially in areas like electronics and software,” said Ambareesh Baliga, a senior research analyst.
Mr Baliga pointed out that the mild bounce-back in global commodity prices have led to a slight change in investor sentiments towards the emerging markets. “It seems that the rout in the global commodity prices are behind us. There are only a few economies in the emerging markets, which are doing well at the moment. India will be the first country to benefit from any revival in investment by global portfolio investors,” he added.
