FPIs infuse Rs 31K Cr in equities on valuations, Rupee gains

Foreign Portfolio Investors (FPIs) have injected nearly Rs31,000 crore into Indian equities over the last six trading sessions, driven by attractive valuations, a stronger rupee, and improving macroeconomic indicators. This renewed buying activity has played a key role in the benchmark Nifty index's nearly 6% recovery, signaling a revival of investor confidence in the Indian market. The latest infusion has also helped offset the overall outflow for March, which now stands at Rs 3,973 crore, as per depository data.
This marks a significant shift in FPI behavior compared to earlier months, when foreign investors pulled out Rs34,574 crore in February and Rs78,027 crore in January. Market experts believe that future trends in FPI inflows will be influenced by global trade developments, particularly the tariffs expected to be imposed by the U.S. on April 2. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, reportedly noted that if these tariffs remain moderate, the ongoing market rally could sustain its momentum.Vijayakumar emphasized that these factors have contributed to a favorable investment climate for FPIs.
Recent official data shows that while FPIs have been net sellers in March, withdrawing Rs3,973 crore overall, they have poured in Rs30,927 crore between March 21 and March 28. This shift from heavy selling to renewed buying is attributed to multiple factors, including an attractive market valuation after a 16% correction from the September 2024 peak, the recent appreciation of the rupee, and strong macroeconomic indicators such as GDP growth, industrial production (IIP), and moderating consumer price inflation (CPI). 
The Securities and Exchange Board of India’s (Sebi) latest policy changes have also influenced investor sentiment. Manoj Purohit, Partner & Leader, FS Tax, Tax & Regulatory Services at BDO India, highlighted that Sebi's recent decision to increase the threshold for granular beneficial ownership disclosures from Rs25,000 crore to Rs50,000 crore has encouraged FPIs to reconsider their investment stance. This move was in response to concerns raised by large banks over restrictions on P-Notes trading volume.
While the recent surge in inflows has lifted market sentiment, the broader outlook for India's equity markets in FY25 remains uncertain, with significant fluctuations in FPI participation. Initially, foreign investors were net buyers, drawn by India’s strong economic fundamentals. However, from October 2024 onward, FPIs withdrew large sums, resulting in total outflows of approximately $15 billion (between April 1, 2024, and March 27, 2025), marking the highest-ever annual FPI exit. This sell-off contributed to a notable decline in equity markets from their late-September highs.
Himanshu Srivastava, Associate Director of Manager Research at Morningstar Investment, reportedly noted that FPI investment patterns have been shaped by multiple global and domestic factors. While early inflows were driven by India's robust economic growth and investor optimism, subsequent withdrawals were triggered by slowing corporate earnings, weakening urban demand, and subdued income growth. Additionally, global trade tensions and policy uncertainties in the U.S. led FPIs to shift capital to safer assets, further influencing the trajectory of Indian equities.
Going forward, FPI flows will continue to be driven by global economic conditions, domestic growth prospects, and policy decisions. Investors will closely monitor key developments, including U.S. tariff policies and central bank decisions, to gauge the direction of future market trend, stated experts.

(Business Correspondent)