Foreign investors continue to exhibit confidence in the country’s equity market, injecting Rs 19,860 crore in May driven by favourable global economic indicators and strong domestic fundamentals.
Illustration: Dominic Xavier/Rediff
This positive momentum follows a net investment of Rs 4,223 crore in April, data with the depositories showed.
Prior to this, foreign portfolio investors (FPIs) had pulled out Rs 3,973 crore in March, Rs 34,574 crore in February, and a substantial Rs 78,027 crore in January.
Going forward, FPIs are likely to continue their investment in India. However, at higher levels they might sell since valuations are getting stretched, VK Vijayakumar, Chief Investment Strategist, Geojit Investments, said.
According to the data with the depositories, FPIs made a net investment of Rs 19,860 crore in equities in May. The latest flow has helped narrow the outflow to Rs 92,491 crore in 2025 so far.
India’s equity markets witnessed a sharp resurgence in FPI activity in April.
The sustained buying spree that began in mid-April continued in May too, reflecting renewed investor confidence.
Himanshu Srivastava, Associate director – Manager Research, Morningstar Investment, said that several factors influenced FPI flows in May. Globally, easing US inflation and expectations of interest rate cut by the Federal Reserve made emerging markets like India more attractive.
Domestically, India’s strong GDP growth, robust corporate earnings, and policy reforms enhanced investor confidence.
“Global macros like declining dollar, slowing US and Chinese economies and domestic macros like high GDP growth and declining inflation and interest rates are the factors driving FII inflows into India,” Vijayakumar said.
In terms of sectors, FPIs have been buyers in autos, components, telecom and financials in the first half of May.
Apart from equities, FPIs invested Rs 19,615 crore in debt general limit and Rs 1,899 crore in debt voluntary retention during the period under review.
