Foreign Investors Boost Indian Equity Market with Significant Inflows

In May, foreign investors significantly boosted India's equity market with an investment of Rs 19,860 crore, following a positive trend from April. This resurgence is attributed to favorable global economic indicators and strong domestic fundamentals. Experts predict continued investment, although potential selling may occur at higher valuations. Factors such as easing US inflation and India's robust GDP growth are enhancing investor confidence. Discover more about the sectors attracting FPI interest and the overall impact on the market.

By Narendra Chaudhary Jun 1, 2025, 18:35 IST

Strong Investment Trends in Indian Equities

New Delhi: Foreign investors are showing strong confidence in India's equity market, with an impressive infusion of Rs 19,860 crore in May, spurred by positive global economic signals and robust domestic fundamentals.

This surge follows a net investment of Rs 4,223 crore recorded in April, according to data from the depositories.

In contrast, foreign portfolio investors (FPIs) had withdrawn Rs 3,973 crore in March, Rs 34,574 crore in February, and a significant Rs 78,027 crore in January.

Looking ahead, FPIs are expected to maintain their investment momentum in India. However, they may consider selling at elevated levels due to stretched valuations, as noted by VK Vijayakumar, Chief Investment Strategist at Geojit Investments.

Data indicates that FPIs invested a net total of Rs 19,860 crore in equities during May, which has helped reduce the overall outflow to Rs 92,491 crore for the year 2025 thus far.

India's equity markets experienced a notable revival in FPI activity in April, with the buying trend that started in mid-April continuing into May, reflecting a resurgence in investor confidence.

Himanshu Srivastava, Associate Director at Morningstar Investment, highlighted that various factors influenced FPI flows in May. Globally, easing inflation in the US and anticipated interest rate cuts by the Federal Reserve have made emerging markets like India more appealing. Domestically, India's strong GDP growth, solid corporate earnings, and ongoing policy reforms have bolstered investor confidence.

"Global factors such as a declining dollar, slowing economies in the US and China, along with domestic indicators like high GDP growth and decreasing inflation and interest rates, are driving FII inflows into India," Vijayakumar stated.

In terms of sector performance, FPIs have shown interest in the automotive, components, telecom, and financial sectors during the first half of May.

In addition to equities, FPIs also allocated Rs 19,615 crore in the general debt limit and Rs 1,899 crore in voluntary retention debt during the review period.