Foreign Portfolio Investors (FPIs) made a significant return to India’s equity markets last week, bringing in Rs 17,425 crore between April 21 and April 25, according to depository data. This comes after a net inflow of Rs 8,500 crore during the previous, holiday-shortened week ending April 18.
Analysts attributed this surge to a favourable blend of global and domestic factors that made Indian equities more appealing, reported PTI.
Globally, the stability seen in major markets, alongside growing expectations that the US Federal Reserve may pause its rate hikes, improved investor confidence.
A steady US dollar and easing global trade tensions further enhanced risk appetite for emerging markets like India. “Easing global trade tensions further lifted investor sentiment,” said Himanshu Srivastava, Associate Director – Manager Research, Morningstar Investment.
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Domestic Resilience and Global Shifts Drive Renewed FPI Interest
On the home front, India’s strong macroeconomic indicators played a crucial role. The country’s resilient growth prospects, a downward trend in inflation, and a positive forecast for an above-normal monsoon in 2025 boosted market sentiment among foreign investors. Srivastava noted that “these factors created an attractive investment environment for foreign investors.”
Despite the recent inflows, FPIs withdrew Rs 5,678 crore from equities so far in April, bringing the total equity outflow to Rs 1.22 lakh crore since the start of 2025. The beginning of the month had witnessed substantial selling pressure from FPIs, largely driven by concerns around new US tariff policies and escalating tensions between India and Pakistan following the Pahalgam terror attacks.
However, a reversal in FPI trends is now evident, driven by two major shifts. “One, the sustained rise in dollar, which triggered the momentum trade towards US equities, has reversed with the dollar index falling from a peak of 111 in mid-January this year to around 99 now,” said V K Vijayakumar, Chief Investment Strategist, Geojit Investments.
“Two, the steep decline in US growth expected this year will impact corporate earnings in US while the Indian economy will continue to remain resilient with growth of above 6 per cent accompanied by recovery in corporate earnings,” he added.
