New Delhi. After the US Central Bank cut interest rates, there has been a tremendous boom in the Indian stock market. The special thing is that foreign investors are now investing heavily in the Indian market. On Friday, FIIs made a record of purchases. In the last trading session, foreign investors made the biggest purchase in the Indian stock market in 3 years and spent more than 14 thousand crores rupees in the stock market in a single day. This is the biggest purchase in a day in the last 3 years. At the same time, historically it is the eighth highest purchase. FIIs made the biggest purchase in a day on May 6, 2020. On that day, foreign investors invested Rs 17,123 crore in the stock market.

The biggest reason for this purchase by FIIs is the reduction of interest rates by the Fed by 0.50 percent. Bond yields in the US are continuously decreasing, which is motivating FIIs to invest in emerging markets like India. Till September 20 this month, the total FII investment has come to Rs 33,699 crore. So far in 2024, the total FII investment in India has reached Rs 76,585 crore.

Why invest money with a heavy hand
According to a report by Economic Times, Dr. VK Vijayakumar, Chief Investment Strategist, at Geojit Financial Services, says that the main reason for the boom in the market is the reduction in interest rates by the US Fed. The Fed rate is expected to fall continuously by the end of 2025 and it will become 3.4%. The trend of FII buying is likely to continue in the coming days as well.

Vijayakumar said, "Banking stocks have become attractive after the news of a reduction in the credit-deposit gap. Since banking stocks are at a reasonable price in this overvalued market, the buying trend in banking stocks may continue, which may also push the index up."

Manoj Purohit of BDO India said that the primary factors that make emerging markets like India attractive despite global market uncertainties are a balanced fiscal deficit, the impact of interest rate cuts on the Indian currency, strong valuations, and RBI's approach to keeping inflation under control without cutting interest rates.

The Indian market has become attractive
Emkay Global's Research and Strategist Sheshadri Sen said that investors who have been waiting for many days are now willing to look at India more constructively. Sen says that valuation concerns still remain, but it is believed that India's better macro stability and continued earnings growth are supporting these rich earning multiples.