Foreign Investors Remain Confident Amid India-Pakistan Tensions, Infuse Rs 14,167 Crore In May So Far
Foreign portfolio investors (FPIs) pumped Rs 14,167 crore into Indian equities so far in May, undeterred by recent military tensions between India and Pakistan. This strong inflow, recorded up to May 9, reflected a continuation of the positive momentum that began in April, when FPIs made net investments of Rs 4,223 crore—the first monthly inflow in three months.
Prior to that, overseas investors consistently pulled back, withdrawing Rs 3,973 crore in March, Rs 34,574 crore in February, and a substantial Rs 78,027 crore in January, official data revealed.
The latest figures, sourced from depository data, indicated that the cumulative equity outflow for 2025 has now narrowed to Rs 98,184 crore, reported PTI.
According to VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, “Going ahead, global macros (declining dollar, slowing US and Chinese economy) and domestic macros (high GDP growth and declining inflation and interest rates) will facilitate increasing FPI inflow into the Indian equity.” He added, however, that inflows into debt instruments are expected to remain subdued.
Global Trends and Domestic Strength Drive Renewed Interest
Analysts attributed this renewed interest in Indian equities to a combination of supportive global factors and strong economic fundamentals at home. A key factor drawing foreign money back into the markets is the changing global landscape—specifically, a weakening US dollar, slowing economic activity in the US and China, and optimism around a potential trade agreement between the US and India.
“The momentum continued in May too,” said Himanshu Srivastava, Associate Director – Manager Research at Morningstar Investment. “This renewed momentum was underpinned by a blend of favourable global cues and robust domestic fundamentals that bolstered investor confidence.” He pointed out that the improving foreign exchange environment, marked by a weakening dollar and a strengthening rupee—has made Indian assets more attractive to global investors. Srivastava also cited strong quarterly earnings from major Indian corporations as another factor lifting sentiment.
One standout feature of recent FPI activity has been the consistency of their buying streak. Investors bought Indian equities through the exchanges for 16 consecutive trading sessions until May 8, with cumulative purchases amounting to Rs 48,533 crore. However, this streak was interrupted on May 9, when escalated military developments between India and Pakistan led to a net sale of Rs 3,798 crore, as noted by Vijayakumar.
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Debt Segment Sees Limited Activity
While equities witnessed a surge in foreign participation, the same could not be said for the debt markets. During the period under review, FPIs withdrew Rs 3,725 crore from the general debt limit. However, they allocated Rs 1,160 crore under the voluntary retention route, indicating selective interest in Indian debt instruments.
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