FPIs’ ₹26042 Crore Buying Spree: A Stunning Turnaround in Indian Equities!
Foreign Portfolio Investors (FPIs) remained net sellers in Indian equities for the third consecutive month in March, but a sharp turnaround in the second half significantly reduced overall outflows. In the first fortnight, they withdrew ₹30,015 crore ($3.44 billion), but strong buying in the latter half saw net investments of ₹26,042 crore ($3.04 billion), bringing the total monthly outflow down to ₹3,973 crore ($401.2 million). Several factors will influence FPI activity going forward, including U.S. trade policies, India’s economic appeal compared to a slowing U.S. economy, and stock valuations.
In FY25, FPIs offloaded ₹1,27,041 crore ($14.63 billion), marking the second-largest yearly withdrawal after FY22. Meanwhile, domestic funds followed a different trajectory, with net investments of ₹9,147.6 crore in March—lower than their ₹13,516.6 crore inflows by March 7, suggesting some selling later in the month. However, over the fiscal year, domestic investors infused a record ₹4.7 lakh crore into equities, providing stability to the market. This contrast between foreign and domestic investments highlights shifting market dynamics as global and local investors react to economic conditions. The coming months will be crucial in determining whether FPIs continue their buying momentum or resume selling.
FPIs’ ₹26042 Crore Buying Spree: A Stunning Turnaround in Indian Equities!
Foreign Portfolio Investors (FPIs) remained net sellers of Indian stocks for the third consecutive month in March, though the pace of withdrawals slowed significantly compared to previous months. A notable shift occurred in the second half of the month when FPIs turned buyers, injecting fresh capital into the market after heavy selling in the first two weeks.
In the first half of March, FPIs pulled out ₹30,015 crore ($3.44 billion) from Indian equities. However, this trend reversed in the latter half, with net investments of ₹26,042 crore ($3.04 billion). As a result, the total outflow for the month was reduced to just ₹3,973 crore ($401.2 million), indicating a sharp decline in selling pressure.
Factors Influencing Future FPI Flows
The direction of foreign investment in the coming months will depend on several key factors:
- U.S. Trade Policies: Changes in American trade and economic policies could impact global fund flows.
- Competitiveness of Indian Markets: If the U.S. faces economic challenges, India may attract more foreign capital.
- Stock Valuations: High valuations in Indian equities could deter some investors, while others may see long-term potential.
Breakdown of FPI Activity
- Secondary Market: FPIs sold ₹6,027.8 crore ($637.3 million) worth of shares.
- Primary Market: They bought ₹2,055.2 crore ($236.1 million) in new issuances.
For the entire financial year 2024-25, FPIs withdrew ₹1,27,041 crore ($14.63 billion) from Indian equities—the second-highest annual outflow after FY22, when they pulled out ₹1,40,010 crore ($18.47 billion).
Domestic Investors Counterbalance FPI Outflows
While foreign investors were selling earlier in the month, domestic institutional investors (DIIs) initially supported the market, investing ₹13,516.6 crore by March 7. However, by month-end, their net equity investment had dropped to ₹9,147.6 crore, suggesting some profit-booking in the latter half.
Despite this, DIIs played a crucial stabilizing role throughout the fiscal year, injecting a record ₹4.7 lakh crore into equities. This strong domestic participation offset FPI withdrawals and helped sustain market confidence.
Key Takeaways
- FPIs reduced their selling in March after a strong rebound in the second half.
- Domestic investors remained resilient, absorbing foreign outflows and maintaining market stability.
- Future FPI flows will hinge on global economic conditions and India’s relative attractiveness as an investment destination.
The Indian stock market continues to demonstrate resilience, supported by strong domestic participation even amid foreign investor caution. Moving forward, market trends will depend on both global macroeconomic factors and local investor sentiment.