Foreign investors have continued showing confidence in India’s equity markets, pumping Rs 18,620 crore so far this month. The sharp uptick comes on the back of Rs 4,223 crore of inflows in April, marking a strong reversal after three months of heavy selling.
In the first three months of 2025, foreign portfolio investors (FPIs) had withdrawn a total of Rs 1.16 lakh crore, with January alone seeing an outflow of Rs 78,027 crore.
This turnaround is being driven by a mix of global stability and improving domestic fundamentals.
“A key catalyst was the announcement of a ceasefire between India and Pakistan, which eased regional tensions and lifted investor sentiment,” said Himanshu Srivastava, associate director – manager research, Morningstar Investment. He also pointed to a temporary truce between the US and China on tariffs, which has helped improve risk appetite among global investors.
“With the global trade scenario improving after the pause in trade war between the US and China and the end of the India-Pakistan conflict, the investment scenario has improved,” added VK Vijayakumar, chief investment strategist at Geojit Financial Services.
FPIs are likely to continue their buying interest in India, and therefore, large caps will be resilient, Vijayakumar added.
India’s strong macroeconomic outlook, supportive monetary policy, and expectations of healthy corporate earnings have also boosted the case for equities.
However, the bond market continues to see mixed interest as FPIs pulled out Rs 6,748 crore from the debt general limit while investing Rs 1,193 crore in the voluntary retention during the period reviewed.
In an attempt to revive activity in the bond market, the Securities and Exchange Board of India (Sebi) last week floated a consultation paper proposing waivers and relaxations for FPIs investing in Indian government securities via the VRR and the Fully Accessible Route (FAR).
Manoj Purohit, Partner & Leader, Financial Services Tax at BDO India, noted that the proposal comes at a crucial juncture, with foreign investors still treading cautiously in the Indian bond market despite the recent inclusion of government securities in global bond indices.
So far, till May 16, 2025 FPIs have made a net outflow of Rs 93,731 crore across all segments, though recent trends suggest a possible return to steady inflows, at least in equities.
In the first three months of 2025, foreign portfolio investors (FPIs) had withdrawn a total of Rs 1.16 lakh crore, with January alone seeing an outflow of Rs 78,027 crore.
This turnaround is being driven by a mix of global stability and improving domestic fundamentals.
“A key catalyst was the announcement of a ceasefire between India and Pakistan, which eased regional tensions and lifted investor sentiment,” said Himanshu Srivastava, associate director – manager research, Morningstar Investment. He also pointed to a temporary truce between the US and China on tariffs, which has helped improve risk appetite among global investors.
“With the global trade scenario improving after the pause in trade war between the US and China and the end of the India-Pakistan conflict, the investment scenario has improved,” added VK Vijayakumar, chief investment strategist at Geojit Financial Services.
FPIs are likely to continue their buying interest in India, and therefore, large caps will be resilient, Vijayakumar added.
India’s strong macroeconomic outlook, supportive monetary policy, and expectations of healthy corporate earnings have also boosted the case for equities.
However, the bond market continues to see mixed interest as FPIs pulled out Rs 6,748 crore from the debt general limit while investing Rs 1,193 crore in the voluntary retention during the period reviewed.
In an attempt to revive activity in the bond market, the Securities and Exchange Board of India (Sebi) last week floated a consultation paper proposing waivers and relaxations for FPIs investing in Indian government securities via the VRR and the Fully Accessible Route (FAR).
Manoj Purohit, Partner & Leader, Financial Services Tax at BDO India, noted that the proposal comes at a crucial juncture, with foreign investors still treading cautiously in the Indian bond market despite the recent inclusion of government securities in global bond indices.
So far, till May 16, 2025 FPIs have made a net outflow of Rs 93,731 crore across all segments, though recent trends suggest a possible return to steady inflows, at least in equities.
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