New Delhi : Foreign portfolio investors (FPIs) have shown renewed interest in the Indian stock market, pumping in a net Rs 7,962 crore ($1.03 billion) in the first week of July, according to data from the National Securities Depository Limited (NSDL).

With this positive flow, the total FPI investment in India in 2024 has reached Rs 1,03,934 crore ($13.5 billion).

India is at the forefront of emerging markets

India was not the only emerging market to see FPI inflows this month. Indonesia saw inflows of US$127 million, Malaysia US$81 million, and the Philippines saw modest inflows of US$5 million.

South Korea led the way with a record-breaking US$927 million inflow in the first week of July. However, Thailand and Vietnam bucked the trend, seeing net outflows of US$69 million and US$68 million, respectively.

Optimism boosts investment 

Market analysts attribute the positive trend in India to optimism over the upcoming Union Budget. Expectations of strong government support for the economy, especially the manufacturing sector, are boosting investor sentiment.

Additionally, the upcoming Q1FY25 earnings season for IT services companies is generating interest. However, experts caution that FPI flows are likely to remain volatile.

This recent inflow reverses a two-month trend of FPI outflows. June saw a turnaround, with FPIs investing a net Rs 26,565 crore in Indian equities after an initial sell-off prompted by the election results.

Earlier, May and April witnessed net outflows of Rs 25,586 crore and Rs 8,671 crore, respectively, adding to pressure on the market.

The surge in FPI investments reflects renewed investor confidence in India's market potential and economic outlook. As the central government prepares to present its budget, all eyes will be on its impact on market performance.