Foreign investors inject close to ₹20,000 crore into India equities market in May

The Indian stock market has come a long way since January, which saw foreign portfolio investors (FPIs) pull out a staggering ₹78,027 crore. Five months later, FPIs turned net buyers, bringing in ₹19,860 crore to the nation’s equities market in May 2025.

The reversal has been steady. From ₹78,027 crore pulled out in January, it reduced to ₹34,574 crore in February, and ₹3,973 crore in March. In April, positive momentum returned to the markets with ₹4,223 crore of net investment.

But market watchers also warn about inflated valuations. According to V.K. Vijayakumar of Geojit Investments, if valuations are stretched, FPIs might sell at higher levels despite their continued inflow into India.

The inflow in May brought the net year-to-date fund outflow below ₹1 lakh crore, shrinking it to ₹92,491 crore in 2025 till date. Investment in debt general limit also rose, with FPIs injecting ₹19,615 crore during the month.

A combination of factors, including mounting expectations of an interest rate cut by the US Federal Reserve, US inflation data, India’s GDP growth exceeded estimates, healthy earnings seasons, and certain policy pushes made the nation’s market more attractive to foreign investors.

“Global macros like declining dollar, slowing US and Chinese economies and domestic macros like high GDP growth and declining inflation and interest rates are the factors driving FII inflows into India,” Vijayakumar added.

India recently became the fourth-largest economy in the world, surpassing Japan. The official economic data that was released in the past week of May 2025 saw India’s GDP growth at 7.4 per cent in the January-March quarter, helped by a bump in private consumption and steady growth in construction and manufacturing.

Business