After a shaky start to the month, foreign portfolio investors (FPIs) have staged a sharp comeback, turning net buyers of Indian equities over the past week. A weakening dollar, easing global trade tensions, and growing expectations of a US slowdown have fueled a buying spree worth ₹28,249 crore in just seven days.
During the same time period, the Nifty 50 index and 30-stock Sensex gained over 3 per cent thanks to the US President Trump hitting a 90-day pause on most reciprocal tariffs.
“In just the last seven trading sessions, FPIs have turned decisively positive on Indian equities. This shift is largely attributed to a weakening US dollar, revisits of tariff agreements, and a renewed sense of optimism around India’s economic trajectory,” said Manoj Purohit, Partner & Leader, FS Tax, Tax & Regulatory Services, BDO India.
Ajit Mishra, SVP – Research, Religare Broking, added that ongoing discussions between the US and its trade partners regarding new agreements have helped ease fears about tariffs’ potential drag on global commerce.
Interestingly, FPIs appear to have largely brushed aside geopolitical concerns following the terror attacks in Pahalgam, which heightened tensions between India and Pakistan, said analysts.
“The sustained rise in the dollar, which earlier triggered momentum trades toward US equities, has reversed. The dollar index has fallen from a peak of 111 in mid-January to around 99 now,” said VK Vijayakumar, Chief Investment Strategist, Geojit Investments.
Economic resilience
Adding to the pressure on US markets are concerns of a sharp slowdown in growth and weaker corporate earnings. In contrast, India’s economic resilience — with GDP growth above 6 per cent and a recovery in earnings — has made it an attractive destination for global investors, Vijayakumar said.
Analysts expect the positive momentum in FPI inflows to continue in the near term. The recent buying spree has trimmed total FPI outflows for the year to ₹1.22 lakh crore so far.
Between January and March 2025, FPIs had cumulatively pulled out ₹1.16 lakh crore, withdrawing ₹78,027 crore in January, ₹34,574 crore in February, and ₹3,973 crore in March.
Tariff-related uncertainties had prompted net outflows of ₹33,927 crore in the first half of April. However, with sentiment reversing, total April outflows have now narrowed to ₹5,678 crore as of April 25.
Going forward, investors will be closely tracking India’s stance on further tariff negotiations, corporate earnings season and escalating India-Pakistan tensions to gauge the markets’ direction, said analysts.
Published on April 26, 2025
