FPIs invest ₹31k cr in equities in 6 sessions on strong valuations, macro

Foreign investors have infused nearly ₹31,000 crore in the Indian equity markets in the last six trading sessions of the month primarily due to attractive valuations, appreciation in the rupee and improvement in macroeconomic indicators.

The re-emergence of Foreign Portfolio Investors (FPIs) as buyers contributed to a smart recovery of about 6 per cent in benchmark index Nifty, reflecting renewed confidence in the market. 

This latest infusion has also helped reduce the overall outflow for March to ₹3,973 crore, according to data from the depositories.

In comparison to previous months, this marks a significant improvement, as FPIs had pulled out ₹34,574 crore in February and  ₹78,027 crore in January.

Going forward, the trend in FPI flows will depend mainly on the Trump's reciprocal tariffs expected on April 2. If the tariffs are not severe, the rally may continue, VK Vijayakumar, Chief Investment Strategist, Geojit Investments, said.

According to the data, FPIs have pulled out Rs 3,973 crore from Indian equities in March. However, in the last six trading sessions (from March 21 to March 28), they put in ₹30,927 crore.

The shift from sustained selling to modest buying indicates a change in FPIs' strategy, influenced by factors such as attractive valuations after a 16 per cent correction from the September 2024 peak, the recent appreciation of the rupee, and favourable macroeconomic indicators like GDP growth, industrial production (IIP), and CPI inflation, according to Vijayakumar.

Additionally, one of the key announcements made by markets regulator Sebi in its board meeting with respect to the FPI community has encouraged them to invest, Manoj Purohit, Partner & Leader, FS Tax, Tax & Regulatory Services, BDO India , said.

Based on the reaction of a few large banks on restricting the P-Notes trading volume, Sebi decided to increase existing threshold from ₹25,000 crore to ₹50,000 crore for granular beneficial ownership disclosures, he added.

While the recent inflows have boosted market sentiment, the broader picture for India's equity markets in financial year 2024-25 reflects significant fluctuations in FPI flows.

Initially, FPIs were net buyers, drawn by India's robust economic growth and favourable market conditions. However, starting October 2024, a pronounced shift occurred, with FPIs withdrawing significant investments from the Indian equity markets, which stood at approximately $15 billion (between Apr 1, 2024 and Mar 27, 2025), marking the highest-ever recorded outflow.

This exodus contributed to a significant decline in the Indian equity markets from its late-September peak.

Himanshu Srivastava, Associate director - Manager Research, Morningstar Investment highlighted several factors that influenced these FPIs movement. The initial inflows were driven by India's strong economic performance and investor confidence.

The subsequent outflows were prompted by concerns over slowing corporate earnings, with growth decelerating due to weakening urban demand and modest income increases. Additionally, global trade tensions and uncertainties surrounding U.S. economic policies led investors to reallocate capital to perceived safer assets, he added.