Stock Buying by Domestic Funds in 2023 Exceeds Foreign Inflow

Domestic investors plowed money into equity funds for a 31st straight month in September.

Indian local funds have overtaken foreign investors as the biggest buyers of shares so far this year, helping provide an anchor to the market amid an uncertain global backdrop.

Powered by continued inflows from retail investors, equity purchases by local institutions — including mutual funds and insurers — have climbed to $16.5 billion for the year thus far. Domestic investors plowed money into equity funds for a 31st straight month in September.

In contrast, foreign funds have been trimming their holdings in recent weeks as concern over higher-for-longer US rates dents appetite for riskier assets. As the world’s fastest growing major economy, India has emerged a darling for emerging-market investors in 2023 as sentiment toward China soured, but that buying momentum has weakened of late. International funds turned sellers in September after six consecutive months of purchases and their year-to-date inflows now stand at $14.2 billion.

Domestic funds are on course to dominate inflows for the third straight year, thanks to the retail investing boom took off during the pandemic. Still, with two months left to go this year, local funds’ purchases in Indian equities are roughly half the $35.8 billion amount seen for all of last year.