FPIs Reverse Sentiment In April, Turn Net Buyers For First Time In Three Months. See What Drove The Inflows

The fresh inflows have now brought down the net outflow for 2025 to Rs 1.12 lakh crore. The revival in investor sentiment was supported by positive global trends and India’s domestic fundamentals.

One of the contributing factors has been renewed optimism surrounding a potential trade pact between the US and India.

Source : ABPLIVE AI

Foreign investors made a notable comeback in April, pumping Rs 4,223 crore into Indian equities — their first net positive position in three months. This shift marked a departure from consistent outflows earlier in the year, with FPIs having pulled out Rs 3,973 crore in March, Rs 34,574 crore in February, and a significant Rs 78,027 crore in January, official data revealed.

The fresh inflows have now brought down the total net outflow for 2025 to Rs 1.12 lakh crore, reported PTI. According to data from depositories, the revival in investor sentiment was supported by encouraging global trends and India’s strong domestic fundamentals.

"India's equity markets witnessed a sharp resurgence in FPI activity in April, signalling a marked reversal from the outflows seen earlier this year. This renewed momentum was underpinned by a blend of favourable global cues and robust domestic fundamentals that bolstered investor confidence," said Himanshu Srivastava, Associate Director - Manager Research at Morningstar Investment.

Global Shifts, Domestic Strength Boost Investor Confidence

The uptick in foreign investment is closely tied to a broader shift in global economic cues. One of the contributing factors has been renewed optimism surrounding a potential trade pact between the US and India. Additionally, currency dynamics worked in India’s favour, with the Indian rupee gaining ground as the US dollar weakened. Srivastava noted, "One of the key catalysts behind this trend has been the improving outlook for a potential US-India trade agreement. Additionally, the weakening of the US dollar, alongside a strengthening Indian rupee enhanced the appeal of Indian assets to global investors." He also pointed to strong quarterly results from major Indian companies as further fuel for the bullish sentiment.

V K Vijayakumar, Chief Investment Strategist at Geojit Investments, identified two main drivers for the strategic pivot by foreign investors. “Firstly, President Donald Trump's announcement of a 90-day pause on implementation of reciprocal tariffs led to a recovery in global equity markets. Secondly, the weakness in the dollar halted and reversed the momentum trade towards the US that was witnessed after Trump's victory in the elections,” he explained. Vijayakumar further noted that the fall in the dollar index — from 111 on January 11 to 99 recently — was instrumental in redirecting FPI flows to emerging markets, particularly India.

Debt Market Sees Continued Outflows

While equities saw renewed interest, foreign investors continued to pull funds from the debt market. During the same period, FPIs withdrew Rs 13,314 crore from the debt general limit and another Rs 5,649 crore from the debt voluntary retention route.

Looking ahead, Vijayakumar cautioned that while inflows into equities may remain steady, the pace could be tempered by moderate earnings expectations. “FPI inflows could remain stable, but will be constrained by the modest earnings growth of around 5 per cent in FY25,” he said.