Foreign portfolio investors (FPIs) have injected ₹14,167 crore into Indian equities so far in May, demonstrating strong confidence in the country’s economic fundamentals despite ongoing India-Pakistan tensions.
This surge follows a net investment of ₹4,223 crore in April, marking a reversal from three consecutive months of outflows. Prior to April, FPIs had withdrawn ₹3,973 crore in March, ₹34,574 crore in February, and ₹78,027 crore in January.
Key Drivers Behind the Investment Surge
- Strong Domestic Fundamentals – India’s GDP growth exceeding 6.5%, declining inflation, and lower interest rates have made Indian assets attractive to global investors.
- Global Economic Trends – A weakening US dollar and slowing economies in the US and China have encouraged foreign investors to seek opportunities in emerging markets like India.
- US-India Trade Prospects – Optimism surrounding a potential US-India trade agreement has further boosted investor sentiment.
- Corporate Earnings – Strong quarterly earnings from major Indian companies have reinforced confidence in the market.
Market Trends and Expert Insights
FPIs have been consistently buying equities for 16 consecutive trading days, accumulating ₹48,533 crore until May 8. However, they sold ₹3,798 crore on May 9, following an escalation in India-Pakistan tensions.
Despite geopolitical concerns, analysts believe that India’s macroeconomic stability will continue to attract foreign investments. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, stated that global and domestic factors will likely sustain FPI inflows in the coming months.
On the debt front, FPIs withdrew ₹3,725 crore from the general debt limit but invested ₹1,160 crore in the debt voluntary retention route, indicating selective interest in Indian debt instruments.
As India navigates geopolitical uncertainties, the resilience of foreign investments underscores the country’s strong economic fundamentals and investor confidence.
