Foreign investors upped the ante in Indian markets on the second day after the US Federal Reserve’s larger-than-expected interest rate cut, catapulting the benchmark Nifty 50 and Sensex indices to fresh highs.
To be sure, part of the ₹14,000 crore provisional buying by foreign institutional investors on Friday was due to index provider FTSE’s semi-annual rebalancing of its prestigious All-World Index. The rest was driven by active buying due to the US rate cut, which is expected to result in higher capital flows into emerging markets like India.
Investors turned richer by $7 trillion after Friday’s rally as FIIs net invested a provisional ₹14,064.05 crore—the eighth highest in a single day since FIIs began investing in Indian markets. Of this, ₹7,000-8,000 crore was on account of investment by global passive funds, and the rest because of active buying.
The FTSE All-World Index, like the MSCI, is used by global investors to decide on allocating funds to developed and emerging market stocks. The index undergoes changes twice a year, in March and September. This time around, brokerage Nuvama estimated ICICI Bank Ltd to have attracted $200 million (about ₹1,670 crore) and Kotak Mahindra Bank Ltd, $87 million ( ₹726 crore).
The highest single-day purchase by FIIs so far was ₹17,122.71 crore on 6 May 2020.
Domestic institutional investors, on the other hand, net sold shares…
