Foreign Portfolio Investors (FPIs) have shown a shift in sentiment this week, easing their equity selling spree in Indian markets after nearly three months of continuous outflows. Data from depositories revealed that FPI outflows narrowed to ₹31,719 crore for the month through March 21, compared to ₹30,016 crore as of March 13.
The moderation in FPI outflows coincided with a more positive global outlook, including a potential de-escalation in the Russia-Ukraine conflict and a dovish stance from the U.S. Federal Reserve, which hinted at possible rate cuts. These factors contributed to a significant rally in Indian equities, with the Nifty50 and Sensex posting their best weekly performance in four years.
FPIs turned net buyers of Indian equities in three of the past five trading sessions, with a single-day high of nearly ₹7,500 crore on Friday—marking the highest daily net inflow of 2025. This shift in FPI strategy helped break a 14-week streak of continuous outflows, boosting market sentiment.
The Sensex surged over 3,000 points in the last five sessions, while the Nifty50 rebounded by 6 percent from its recent lows. However, market experts remain cautious about the sustainability of the rally, citing looming risks such as the upcoming U.S. government’s ‘Reciprocal Tariff’ regime on April 2.
Despite these challenges, experts noted a visible improvement in FPI sentiment, driven by positive domestic fundamentals and global tailwinds. Himanshu Srivastava of Morningstar Investment highlighted easing global concerns and supportive economic indicators as key factors driving FPI inflows.
In addition to equities, FPIs have also increased their investments in Indian debt markets, with net inflows reaching ₹36,750 crore as of March 21. Market participants anticipate a rate cut by the Reserve Bank of India (RBI) in its upcoming meetings, further supporting investor confidence in debt instruments.
While the recent moderation in FPI selling has provided a much-needed boost to Indian markets, analysts emphasize that sustained inflows will depend on various factors, including global risk sentiment, US monetary policy, and domestic economic indicators. With uncertainty still lingering, markets are likely to remain volatile in the near term, but positive domestic trends could continue to attract foreign capital into Indian markets.
