FPIs Reverse Sentiment, Infuse Almost Rs 31,000 Crore In Last 6 Sessions In March. Find Out Why

According to depository data, despite net outflows earlier in March, the recent infusion helped narrow the overall monthly withdrawal to Rs 3,973 crore.

Market experts believe that the future trajectory of FPI investments will be heavily influenced by upcoming trade policies.

Source : ABPLIVE AI

Foreign investors made a strong comeback in the Indian equity markets, injecting close to Rs 31,000 crore in the last six trading sessions of March. This turnaround was driven by improved macroeconomic conditions, a stronger rupee, and appealing stock valuations.

The influx of funds significantly contributed to a nearly 6 per cent recovery in the Nifty benchmark index, showcasing renewed investor confidence, reported PTI.

According to depository data, despite net outflows earlier in March, the recent infusion helped narrow the overall monthly withdrawal to Rs 3,973 crore. This marked a stark improvement compared to previous months when Foreign Portfolio Investors (FPIs) dumped Indian equities worth Rs 34,574 crore in February and Rs 78,027 crore in January.

Market Outlook Hinges on US Tariff Decision

Market experts believe that the future trajectory of FPI investments will be heavily influenced by upcoming trade policies. "The trend in FPI flows will depend mainly on the Trump administration's reciprocal tariffs expected on April 2. If the tariffs are not severe, the rally may continue," said VK Vijayakumar, Chief Investment Strategist at Geojit Investments.

The data showed that while FPIs were net sellers earlier in March, pulling out Rs 3,973 crore, their sentiment shifted significantly in the last six sessions (March 21-28), bringing in Rs 30,927 crore. This shift was attributed to a combination of factors, including the market’s 16 per cent correction from its September 2024 peak, a strengthening rupee, and encouraging economic indicators such as GDP growth, industrial output, and controlled inflation, Vijayakumar explained.

Sebi’s Policy Shift Encourages Investment

A key regulatory change by the Securities and Exchange Board of India (Sebi) also played a role in encouraging foreign investments. "One of the key announcements made by Sebi regarding the FPI community has encouraged them to invest," said Manoj Purohit, Partner & Leader, FS Tax, Tax & Regulatory Services, BDO India.

He added that Sebi’s decision to raise the threshold for granular beneficial ownership disclosures from Rs 25,000 crore to Rs 50,000 crore was influenced by feedback from major banks regarding restrictions on P-Notes trading volume.

While the recent surge in FPI inflows is a positive sign, the broader trend over the 2024-25 financial year reflected significant volatility. Initially, foreign investors were net buyers, drawn by India’s economic strength. However, since October 2024, FPIs pulled out nearly $15 billion (from April 1, 2024, to March 27, 2025), marking the highest-ever recorded outflow.

Himanshu Srivastava, Associate Director - Manager Research at Morningstar Investment, explained the key drivers behind this volatility. "The initial inflows were fueled by India's strong economic performance and investor confidence. However, concerns over slowing corporate earnings, weakening urban demand, and modest income growth led to subsequent outflows. Additionally, global trade tensions and uncertainties around U.S. economic policies caused investors to shift capital to perceived safer assets," he said.