Foreign Investors Return to India: A Brief Respite Amidst Global Uncertainty

Amidst global economic challenges and a shortened trading week, foreign investors invested Rs 8,500 crore in Indian equities, driven by a weakening US dollar. While this marks a positive shift, overall FPI activity remains negative for April, highlighting ongoing challenges in the global market

Despite a shortened trading week due to holidays, foreign investors injected approximately Rs 8,500 crore into Indian equities, as per the National Securities Depository Limited (NSDL). The positive inflow of foreign portfolio investment (FPI) during the week occurred within a three-day trading window, due to holidays on Monday and Friday.

The recent inflows suggest a resumption of foreign investor interest after months of selling in the equity sector, leading to a positive market close. Analysts attribute this interest to the depreciation of the US dollar, making currencies like the Indian rupee more appealing, encouraging FPIs to relocate their investments to India.

Aashish P Sommaiyaa, Executive Director & CEO of WhiteOak Capital, explained to ANI that the ongoing USA tariff scenarios and the impending global slowdown have dual outcomes. A declining dollar coupled with a stronger rupee facilitates FPIs' capital shift from the US to India. Furthermore, this scenario allows the Reserve Bank of India (RBI) greater flexibility with monetary and credit conditions, potentially increasing India's attractiveness amidst global slowdowns.

Nonetheless, despite last week's significant inflows from April 15 to April 17, the overall FPI activity for April remains negative. FPIs have withdrawn a net of Rs 23,103 crore from Indian equities so far this month. The broader 2025 outlook suggests a negative trajectory, with total net outflows amounting to Rs 1,39,677 crore this year. While recent inflows offer some optimism, market analysts remain vigilant of recurring global uncertainties that could sway investor sentiment.

(With inputs from agencies.)