Foreign investors are making a notable return to Indian equity markets after a period of consistent withdrawals earlier this month. Last week, these investors infused nearly ₹8,500 crore, signaling a rebound in investor confidence fueled by India’s robust domestic economy and its ability to navigate global trade uncertainties.
Significant Inflows from Foreign Portfolio Investors
In the week concluding on April 18, Foreign Portfolio Investors (FPIs) contributed a net total of ₹8,472 crore into the stock market. This surge followed a brief withdrawal of ₹2,352 crore on April 15, quickly countered by substantial inflows of ₹10,824 crore over the next couple of days, as per data from depositories. It’s important to note that this particular week was shortened due to market closures on Monday for Ambedkar Jayanti and Friday for Good Friday.
A Shift in Momentum After Prior Withdrawals
Despite this positive shift, April still shows a net withdrawal of ₹23,103 crore by FPIs, contributing to an overall outflow of ₹1.4 lakh crore since January 2025. The beginning of the month was characterized by aggressive selling, primarily driven by uncertainties surrounding changes in U.S. tariff policies.
Reasons Behind the Resurgence
Analysts attribute this resurgence to two main factors. Firstly, a drop in the US Dollar Index to around 100—alongside expectations for further depreciation—has made emerging markets like India increasingly appealing. Secondly, while growth projections for both the US and China appear lackluster this year, India’s economy is anticipated to expand by 6% in FY26, offering a bright outlook even in a challenging global landscape.
Emphasis on Domestic Consumption
VK Vijayakumar, the Chief Investment Strategist at Geojit Financial Services, highlighted that the focus of the market, including FPIs, is likely to remain on sectors driven by domestic consumption. Key areas of interest include:
- Financial Services
- Telecom
- Aviation
- Cement
- Select Auto Stocks
- Healthcare
This shift in focus reflects a broader trend among investors aiming to capitalize on India’s resilient economic landscape.
As the market landscape evolves, it will be interesting to see how foreign investment patterns develop in response to both domestic and international economic indicators.
