Foreign Portfolio Investors (FPIs) Exercise Caution Amid Uncertainties

Foreign portfolio investors (FPIs) are treading carefully in the Indian equity markets, awaiting further clarity on the Q3 FY25 earnings recovery and fair market valuations. This cautious stance comes despite their active participation throughout 2024, which saw a dramatic 99% plunge in equity investments compared to the previous year.

Domestic Investors Step Up

In contrast to the FPIs' hesitancy, domestic institutional investors (DIIs) have shown strong support for the Indian equity market. October alone saw DIIs purchasing equities worth Rs 89,740 crore, contributing to a total of Rs 4.18 lakh crore in 2024. This robust domestic backing has been crucial in stabilizing the market amidst external pressures and significant FPI outflows.

Global Events and Market Volatility

The report also sheds light on the impact of global events on market stability, including the Indian rupee's depreciation to an all-time low against the US dollar and the anticipation surrounding the US Inauguration Day on 20 January 2025. These factors, combined with disruptions in global supply chains, are expected to contribute to short-term market instability and increased volatility.

As the market navigates through these uncertain times, the emphasis is on cautious optimism. Both domestic and global factors will play pivotal roles in shaping the market's trajectory in the coming months, making it essential for investors to stay informed and vigilant.