FPI flows resume after a day's pause as India, Pak ease border tensions

Foreign portfolio investors (FPIs) resumed buying of Indian equities on Monday, injecting ₹1,246.5 crore, following a weekend ceasefire that eased India-Pakistan border tensions.

 

Stock exchange data shows FPIs had been net buyers for 16 consecutive sessions from April 15 until last Thursday, pouring ₹49,000 crore into Indian stocks, driving a nearly 10 per cent surge in the Nifty index. This marks their longest buying streak since June-July 2023, which came amid a 10 per cent drop in the Dollar index from its 2025 peak, triggered by US tariffs and recession fears. The Indian rupee also strengthened, rising from a low of 88 in February to below 84 this month.

 

“The sharp increase in FPI inflows in recent weeks reflects positive sentiment for India among active and passive investors,” wrote Sanjeev Prasad, co-head, Kotak Institutional Equities in a note. “ We attribute the sharp change in FPI positioning to a 2.5 per cent depreciation in the Dollar index over the past one month and high conviction among investors of India being a relatively ‘better’ market, in light of global growth challenges.”

 

Elara Capital’s Global Liquidity Tracker reported that emerging markets like Taiwan, Brazil, China, and South Korea are also seeing robust inflows, with India recording $326 million last week, following $724 million the week prior — the highest since July 2024. 

 

However, experts caution that FPI flows, often driven by US bond yields and the dollar’s strength, can be volatile.

 

“Foreign flows often take a top-down approach, with the US bond yields and the dollar are often the key drivers. They don’t give much credence to valuations. During the risk off events, they sell at even attractive valuations and re-enter when stocks are pricey,” said a strategist with a foreign brokerage.

 

The US-China trade truce could improve sentiment towards the US markets and could weigh on FPI flows going ahead, he warned.