admin Global investors are channeling substantial funds into Indian equities, reflecting renewed confidence in the country’s financial markets after a period of election-related uncertainty. Recent data compiled by Bloomberg indicates that net foreign investments in India reached $8.5 billion this quarter, the highest since mid-2023, suggesting a strong resurgence of overseas interest.
Market analysts attribute this revival to renewed optimism about India’s economic policies, following Prime Minister Narendra Modi’s re-election for a third term. The consistency in policy direction, coupled with India’s growing significance in global market indices where it now surpasses China, has strengthened investor sentiment. Additionally, the Federal Reserve’s recent interest rate cuts have further enhanced the appeal of Indian markets.
India’s Growth Potential Outshines Emerging Market Peers
India’s growth story continues to attract attention, even as its equity valuations remain higher than those of other emerging markets. The NSE Nifty 50 Index is set to record a ninth consecutive annual gain, with experts noting that India’s robust corporate performance and favorable economic conditions outweigh concerns over premium valuations. The nation’s GDP expanded by 6.7% in the last quarter, surpassing China’s 4.7%, reinforcing the view that India is well-positioned as a driver of global growth.
The International Monetary Fund (IMF) projects that India could become the world’s third-largest economy by 2028, with Bloomberg Intelligence anticipating it to be the top contributor to global economic growth by then. This positive outlook has spurred sustained foreign inflows for four consecutive months, reversing the $1 billion sell-off seen during the April-June quarter due to electoral uncertainties.
In the primary market, foreign investors are increasingly participating in India’s booming IPO landscape, which has been the most active globally this quarter. While smaller IPOs have dominated the scene, larger deals are emerging, drawing in foreign capital. Experts suggest that India’s stable currency and proactive interventions by the central bank have added to the nation’s attractiveness as a key investment destination. As market conditions continue to improve, investors recognise that India’s growth prospects make it a critical market that cannot be ignored for long.
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