FIIs revisit Indian stocks with 2025's 3rd-biggest buy; will flows sustain?

The renewed interest by FIIs in Indian stock markets could be a one-off, said market analysts, who expect flows - both domestic and foreign - to remain volatile going ahead depending on news flow

Foreign institutional investors (FIIs) snapped a nine-day selling streak on April 15, Tuesday, to buy domestic equities worth ₹6,065.78 crore, marking the third-largest single-day buying this year (₹11,111.25 crore on March 27; ₹7,470.36 crore on March 21). On the same day (April 15), domestic funds sold stocks worth ₹1,951.6 crore, according to NSE data.

 

Till April 11, FIIs had sold stocks worth nearly ₹35,000 crore, while domestic institutions mopped up equities worth ₹27,600 crore that saw most global markets, including India, bear the brunt of Donald Trump-imposed tariffs before their 90-day push back.

 

The renewed interest by FIIs in Indian stock markets could be a one-off, said market analysts, who expect more volatility in the flows going ahead. Some buying from the FIIs could be on account of short covering, said an analyst at a domestic brokerage, as foreigners have been on an 'India' selling spree since the past few months amid intermittent bouts of buying.  "There has been a risk-on trade in the last few days across global markets after US President Donald Trump pushed back the tariff levy by 90 days. As a result, most global markets, including India, have moved up. DIIs, on the other hand, have been nervous on account of US tariffs and market valuations back home, which still remain high," he said.

 

 

 

DII / FII flows in April

 

Global funds have been net sellers since October 2024, citing high valuations and global growth concerns. China's stimulus push and tariff threats under US President Donald Trump have also weighed on sentiment toward Indian equities. Since October, global funds have sold Indian equities worth ₹3.47 trillion, data shows.

 

The recent stock sell-off reflects global funds shifting to safe-haven assets to protect returns amid rising trade war fears. In the latest development, Trump launched a probe into potential tariffs on critical minerals while also urging China to begin talks to ease the escalating trade tensions as the US now imposes a 245 per cent levy on goods from Beijing.

 

Even when Trump first introduced his "kind" reciprocal tariff, India was relatively better positioned than its Asian peers, as the impact was expected to be lower. Further, with relatively better macroeconomic fundamentals, growth outlook and with valuation cut from their peak levels, global funds could relook at Indian markets in the long run, analysts had said earlier.

 

"Flows have been volatile - both FII and domestic. FII flows are erratic and move in and out very quickly depending on the dollar index's movement, among other things. The short-term sentiment has changed due to the 90-day pushback of US tariffs, which has seen the global markets rally. This has seen some of the FII money come back into emerging markets (EMs), including India," explained Gaurav Dua, senior vice-president and head of Capital Markets Strategy, Mirae Asset Sharekhan. 

 

  The dollar index, meanwhile, which measures the greenback against six major peers -- British Pound, Euro, Japanese Yen, Swedish Krona, Swiss Franc, and Canadian Dollar -- slipped below the 100 mark for the first time since July 2023 last week and currently trades at 99.5 levels, the lowest since April 2022.

 

The index has slipped 10.6 per cent from its January peak of 110, indicating a weakening US currency, which analysts believe would have prompted FIIs to invest in EMs, including India. "Going ahead, both FII and DII flows will continue to be volatile depending on the developments. In case opportunities crop up elsewhere, FIIs will withdraw money and invest accordingly," Dua said.