FPIs Infuse ₹44,000 Crore into Indian Equities Despite Geopolitical Tensions
In a notable show of confidence, Foreign Portfolio Investors (FPIs) have infused nearly ₹44,000 crore into Indian equities over the past 14 trading sessions, even amid escalating India-Pakistan tensions. This sustained inflow has played a critical role in driving benchmark indices like the Sensex and Nifty 50 to multi-month highs.
14-Day Buying Streak Reflects Confidence
Despite a volatile geopolitical backdrop, FPIs have remained net buyers for 14 consecutive sessions, marking their longest buying streak in two years.
- Between late April and early May, they have pumped in ₹43,940 crore, as per data compiled by Livemint.
- This streak began after a period of sustained selling that followed Indian markets touching record highs in September 2024.
The return of FPI interest has coincided with a broader market rebound, supported by both domestic institutional buying and resilient macroeconomic indicators.
Key Indices Outperform Global Peers
During this inflow period, both Sensex and Nifty 50 have gained over 9%, outperforming most Western and Asian equity markets.
- The rally has helped Indian indices recover earlier losses and approach four-month highs, indicating growing investor optimism.
- Analysts suggest that the stable domestic policy environment and economic momentum have reassured overseas investors.
This performance highlights the relative strength of Indian markets even as global equities remain mixed due to trade uncertainties and slowing global growth.
Why FIIs Are Turning Bullish on India
The renewed interest in Indian equities is driven by a mix of global macro factors and domestic stability.
- With slowing growth in the US and China, and a weaker dollar, India is emerging as a preferred market due to its consumption-led economy.
- Expectations of India finalizing a bilateral trade deal with the US have added to the bullish sentiment.
- President Trump’s recent comments about a potential tariff agreement with India have fueled optimism.
These global tailwinds, combined with India’s internal resilience, are reshaping FPI sentiment after months of cautious positioning.
Domestic Policy Support Strengthens Momentum
The RBI’s accommodative stance has also contributed to improved market sentiment.
- The central bank has cut the repo rate twice and injected liquidity into the financial system, which has helped stimulate credit flow.
- This policy support has ensured that domestic demand remains strong, even as global headwinds persist.
Additionally, strong domestic investor participation has helped absorb selling pressure, giving further confidence to FPIs.
Preference Shifts Toward Large Caps
Experts observe a strategic shift in investment patterns, with FPIs increasingly focusing on large-cap stocks.
- According to Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, the market resilience is closely linked to FPI buying, largely concentrated in blue-chip companies.
- He noted that mid- and small-cap segments are currently seen as overvalued, making large caps more attractive to foreign investors.
- This trend may continue if geopolitical risks remain contained and macro data supports earnings growth.
Such shifts underscore a flight to quality approach in uncertain times, where liquidity and valuation discipline become key factors.
Outlook: Cautious Optimism Amid Geopolitical Watch
While markets have shrugged off immediate geopolitical risks from Operation Sindoor, analysts advise caution.
- The operation’s non-escalatory nature and precision targeting have helped contain market anxiety.
- However, future developments along the India-Pakistan border could introduce fresh volatility.
For now, sustained FPI inflows, strong domestic participation, and robust policy support are keeping Indian markets buoyant.