Renewed Optimism Spurs FPI Inflows Amid Global and Domestic Tailwinds
New Delhi, May 18 — Foreign portfolio investors (FPIs) have continued to show robust interest in India’s equity markets, investing ₹18,620 crore so far in May, driven by global optimism and strengthening domestic fundamentals.This marks a continuation of the positive trend that began in April, when FPIs made net investments of ₹4,223 crore after three consecutive months of outflows. Prior to that, foreign investors had pulled out ₹3,973 crore in March, ₹34,574 crore in February, and a significant ₹78,027 crore in January.
Key Drivers of the Investment Surge
According to depository data, FPIs made net equity investments of ₹18,620 crore up to May 16. Despite the inflows in April and May, the total outflow by FPIs in 2025 still stands at ₹93,731 crore.Analysts attribute the renewed momentum to several critical developments. Himanshu Srivastava, Associate Director – Manager Research at Morningstar Investment, noted that the ceasefire between India and Pakistan eased geopolitical tensions and bolstered investor sentiment. Additionally, the 90-day tariff truce between the United States and China improved global risk appetite, prompting capital reallocation toward emerging markets, particularly India.
VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, emphasized that large-cap stocks are likely to remain resilient as FPIs sustain their buying spree. “With the global trade scenario stabilizing and domestic growth outlook staying strong, the Indian market remains attractive,” he said.
Domestic Fundamentals Strengthen Market Appeal
India’s accommodative monetary policy stance, robust corporate earnings forecasts, and a favorable macroeconomic outlook have further reinforced foreign investor confidence. These factors, analysts say, are key to sustaining the bullish sentiment.Mixed Trends in the Debt Market
While the equity segment attracted strong FPI inflows, the debt market painted a mixed picture. FPIs pulled out ₹6,748 crore from the general debt limit but invested ₹1,193 crore in the debt voluntary retention route (VRR) during the same period.In an effort to revive interest in the bond market, the Securities and Exchange Board of India (Sebi) recently floated a consultation paper proposing waivers and relaxations for FPIs investing via the VRR and the Fully Accessible Route (FAR).
Manoj Purohit, Partner & Leader – Financial Services Tax at BDO India, highlighted the importance of such regulatory support, especially in light of India’s government bonds being included in global indices. “This move is timely as it aims to inject momentum into a drying bond market,” he said.
As global and regional uncertainties ease and India's economic indicators remain favorable, FPIs appear poised to maintain their bullish stance on Indian equities.
