Foreign institutional investor (FII) flows have started returning to India despite persistent global macroeconomic challenges such as elevated US bond yields and high crude oil prices, according to livemint.com. The Indian stock market remains structurally sound with steady earnings growth and reasonable valuations, supporting renewed foreign interest as of September 14.
Jignesh Desai, CEO of Kotak Institutional Equities, highlighted that while the broader index has been flat, the underlying market environment is healthy. The return of FII flows is occurring amid a complex backdrop where US yields and crude prices continue to influence investor sentiment. Desai emphasized that the durability of these inflows will depend on how these external factors evolve, reflecting cautious optimism among institutional investors.
The return of FII flows is significant given the recent volatility driven by global economic uncertainties. India's market fundamentals, including strong corporate earnings and attractive valuations, contrast with the pressures from international markets. This dynamic positions India as a relatively resilient destination for foreign capital compared to other emerging markets, underscoring its importance in global investment portfolios.
The next key indicator for FII flow sustainability will be movements in US bond yields and crude oil prices, which remain critical variables for investor confidence. Market participants will closely monitor these factors as they assess the potential for continued foreign investment in Indian equities, according to livemint.com.