Foreign Investments Boost Indian Stock Markets Amid SEBI Deadline Controversy

Indian stock markets began September positively due to strong foreign investments. Despite a mid-week sell-off tied to SEBI's disclosure deadline, long-term outlook remains optimistic. August saw reduced investments compared to July, indicating mixed trends. Foreign Portfolio Investors play a crucial role in market dynamics.

Indian stock markets opened September on a strong note, driven by robust investments from foreign investors during the month's first week. Data from the National Securities Depository Limited (NSDL) indicated that Foreign Portfolio Investors (FPIs) made net investments totaling Rs 10,980 crore in this period. However, FPIs registered net selling of equities amounting to Rs 904.19 crore on Friday.

This shift coincided with the final day of the Securities and Exchange Board of India's (SEBI) deadline for unregistered FPIs to disclose their beneficial owners. SEBI mandated that all foreign investors provide details of their ultimate beneficial owners by this deadline, failing which they would be disqualified from investing in Indian markets. FPIs that did not comply would need to wind up their existing investments.

'The domestic market panicked due to SEBI's deadline over FIIs disclosure norms,' said Vinod Nair, Head of Research, Geojit Financial Services. He added that this is not expected to impact India's attractiveness to FIIs in the long term. The net foreign investment in August declined to Rs 7,322 crore, the lowest monthly investment in the past three months, compared to Rs 32,359 crore in July. NSDL data showed a late surge in the last week of August, recording net investments of Rs 23,585.92 crore, turning August's overall investment positive.

FPIs, which involve investors acquiring foreign financial assets, play a significant role in influencing market dynamics by channeling substantial funds into the Indian equity market.

(With inputs from agencies.)