Foreign Portfolio Investors (FPIs) have infused ₹18,620 crore into Indian equities so far in May, marking a strong rebound in investor confidence despite global economic uncertainties. This follows a net investment of ₹4,223 crore in April, reversing a three-month trend of heavy selling.
The renewed interest in Indian markets comes amid improving global trade conditions and easing geopolitical tensions. Analysts attribute the surge in FPI inflows to a ceasefire agreement between India and Pakistan, which has helped stabilize regional sentiment. Additionally, a 90-day tariff truce between the US and China has improved risk appetite among global investors, prompting capital reallocation towards emerging markets, with India being a key beneficiary.
On the domestic front, India’s strong macroeconomic outlook, accommodative monetary policy, and robust corporate earnings expectations have further bolstered investor confidence. Large-cap stocks have remained resilient, with key indices witnessing a sharp rally. The Nifty 50 gained 4.2%, while the Sensex surged by 2,875 points over the past week.
Despite the positive momentum in equities, FPIs have maintained a cautious stance on India’s bond market. Investors withdrew ₹6,748 crore from the debt general limit while injecting ₹1,193 crore into voluntary retention schemes. In response, the Securities and Exchange Board of India (SEBI) has proposed regulatory waivers to encourage further FPI participation in government securities.
Market experts predict continued FPI interest in Indian equities, driven by stable economic policies and favorable global conditions. However, they caution that any escalation in geopolitical tensions or shifts in global trade dynamics could impact investor sentiment in the coming months.
As India navigates these economic shifts, policymakers and investors alike will be closely monitoring global developments to sustain the current market momentum.
