Foreign Portfolio Investors (FPIs) emerged as net buyers in Indian markets during the week ending September 19, infusing ₹11,674.51 crore across five trading sessions. This marked a notable shift from recent selling pressures. Following a minor outflow of ₹336.45 crore on September 16, FPIs invested significantly across equities and debt in the following sessions, indicating a renewed interest in Indian assets.
The week’s inflow was bolstered by net equity investments of ₹1,836.82 crore, and debt instruments attracted net inflows of ₹9,599.85 crore. Additionally, mutual fund investments contributed ₹181.31 crore to the overall totals. On September 19, the highest single-day inflow was recorded at ₹2,163.71 crore, with equity investments alone amounting to ₹785.11 crore. Debt-FAR (Fully Accessible Route) bonds saw investments of ₹936.15 crore on that day, which reflects robust foreign interest in Indian government securities.
“Foreign Institutional Investors showed a modest but noticeable return to Indian equities during the week, following a period of mixed activity in previous weeks,” said Himanshu Srivastava, Principal, Manager Research at Morningstar Investment Research India. “Although the inflows were not substantial, the trend indicates improving foreign investor sentiment toward Indian markets.”
The week saw a peak on September 17, when FPIs invested ₹6,491.01 crore, driven largely by debt purchases of ₹4,776.22 crore and equity investments totaling ₹1,645.65 crore. However, the week kicked off with mixed signals; on September 16, FPIs pulled out ₹336.45 crore from equities while maintaining overall positive flows of ₹154.72 crore due to debt investments.
A key factor influencing this trend was the Federal Reserve’s decision on September 17 to cut interest rates by 25 basis points. This decision lowered global borrowing costs, weakened the US dollar, and made emerging market equities more appealing to investors seeking higher returns, according to Srivastava.
Debt markets were particularly active during the week, with General Limit debt securities experiencing net inflows of ₹4,024.54 crore over five days. Fully Accessible Route bonds drew ₹1,763.38 crore, although Voluntary Retention Route debt instruments faced net outflows of ₹56.50 crore for the week.
“Additionally, favorable developments in US-India trade negotiations helped to lift market sentiment. The potential for reduced trade frictions enhances the outlook for Indian exporters and minimizes risk premiums for sectors sensitive to the global economy, particularly IT and manufacturing,” Srivastava noted.
Domestic macroeconomic factors also played a role in boosting foreign investor confidence. “India’s macroeconomic stability further reinforced its status as a relatively resilient emerging market destination, characterized by low inflation, stable growth forecasts, and a sustainable current account situation,” he added.
Primary market investments showed resilience, notably on September 17, when FPIs committed ₹4,965.86 crore primarily in debt instruments. Activity in the derivatives market was heightened, with FPIs maintaining substantial positions in index options valued at ₹352,971 crore and stock futures totaling ₹396,718.53 crore as of September 19.
“Anticipations of currency stability, supported by the Fed’s dovish stance, alleviated concerns regarding rupee volatility, a crucial consideration for foreign capital allocation in emerging markets,” explained Srivastava.
Regardless of the positive weekly trend, caution remains among foreign investors. “Profit-taking and global uncertainties, including tariffs and geopolitical risks, have kept inflows cautious rather than aggressive. Some FIIs have utilized the rally to reduce their positions,” Srivastava noted.
The week’s performance indicates a potential shift in FPI strategy, with investors balancing the opportunity presented by global monetary easing against exposure to emerging market risks.
Published on September 20, 2025.
