FPIs Pump ₹44,000 Crore into Indian Stocks Over 14 Straight Sessions Despite India-Pakistan Tensions

New Delhi | May 7, 2025 — In an unexpected display of confidence, Foreign Portfolio Investors (FPIs) have poured over ₹44,000 crore into Indian equities over the last 14 trading sessions, defying concerns stemming from the recent spike in geopolitical tensions between India and Pakistan. The capital influx reflects global investors’ faith in India’s macroeconomic fundamentals, earnings growth potential, and political stability despite noise at the borders.

This robust foreign inflow marks one of the most consistent and substantial buying streaks in the past year, propelling both Nifty50 and Sensex to new multi-week highs. While markets globally remain wary of central bank cues and geopolitical events, India's equity story is standing resilient.

A Surprising Trend Amid Escalating Cross-Border Rhetoric

The capital market typically reacts sensitively to any tension along the India-Pakistan Line of Control. However, FPIs appear to have shrugged off the risk premium this time. The recent diplomatic war of words, coupled with troop mobilization across sectors of Jammu and Kashmir, raised alarms earlier this month. Yet, the Indian stock market remained largely unshaken, and foreign funds continued to flow in — a clear indicator that investors are looking beyond the headlines.

In the last two weeks alone, major FPIs have pumped funds heavily into large-cap banks, IT, energy, auto, and infrastructure stocks — sectors that are expected to benefit from a combination of high domestic consumption, fiscal consolidation, and reforms-led growth.

₹44,000 Crore in 14 Days: A Breakdown

According to NSDL data, the ₹44,000 crore ($5.3 billion approx) inflow in just 14 sessions is one of the sharpest bursts of FPI buying seen in 2025. Here’s a sectoral snapshot of where the money went:

• Banking and Financials: ₹15,000 crore

• IT and Tech Services: ₹8,500 crore

• Infrastructure and Capital Goods: ₹6,700 crore

• Energy & Oil Marketing Companies: ₹5,000 crore

• Automobiles: ₹3,200 crore

• FMCG and Retail: ₹2,100 crore

• Others (Pharma, Real Estate, Metals, etc.): ₹3,500 crore

The buying spree has coincided with the ongoing earnings season, where many frontline companies have either met or exceeded market expectations, particularly in banking, auto, and IT.

Why Are FPIs So Bullish on India Right Now?

Several factors are driving this renewed foreign interest in Indian equities:

1. Strong Domestic Macro Story

India's GDP growth forecast remains intact at 6.8–7% for FY26, despite global headwinds. A stable rupee, controlled inflation, and strong GST collections have reinforced confidence in India’s economic trajectory.

2. Earnings Growth Visibility

Q4FY25 earnings across key sectors have indicated a steady rebound. Banks have shown impressive net interest margins and asset quality improvement. IT majors, while cautious, have delivered stable revenue outlooks. This earnings resilience is a magnet for foreign capital.

3. Political Stability Ahead of 2025 Assembly Elections

The political landscape remains favorable with the ruling government expected to retain key states in the upcoming elections. A pro-reform, pro-growth narrative continues to dominate, reassuring long-term institutional investors.

4. Valuations Catch-Up Post Correction

After a mild correction in March, Indian equities had slipped into fair valuation territory. This presented an attractive entry point for FPIs, especially in quality large-caps which were available at a discount.

5. China Plus One and India’s Global Positioning

India’s role in the global supply chain is strengthening as companies diversify away from China. This structural theme is drawing sustained global investor attention toward India, especially in manufacturing, logistics, and technology.

Market Reaction: Bulls in Control

As a result of the consistent inflows, both benchmark indices have gained sharply:

• Nifty 50 rose nearly 3.2% in the past two weeks

• Sensex climbed around 2.9%

• Nifty Bank surged over 4.5%

• India VIX, the volatility index, remains below 12, indicating market complacency

Midcaps and smallcaps also joined the rally, albeit with more volatility, as domestic institutions followed suit by latching onto the positive sentiment wave.

Is This a Sustainable Trend?

While the current inflow trend is undeniably positive, market experts urge caution.

“The FPI buying is definitely a strong vote of confidence, but we must watch out for global central bank cues, oil prices, and any escalation in regional tensions,” said Aarti Patel, Chief Investment Strategist at Bluestone Capital. “Markets could reprice if earnings disappoint or geopolitical events worsen.”

However, most analysts believe that India will continue to attract meaningful FPI interest in the medium to long term due to its structural strengths.

The Geopolitical Angle: Ignored or Priced In?

Interestingly, this FPI buying spree has taken place even as India-Pakistan tensions have flared up, especially after renewed skirmishes in the Poonch sector and inflammatory political statements from both sides. Defence analysts, however, believe that investors have factored in the “new normal” of such border tensions, and are not reacting with the same panic as in previous years.

Moreover, there’s an emerging belief that markets have decoupled from short-term geopolitics unless the situation escalates into full-scale conflict, which is deemed unlikely.

Domestic Institutions Also Follow FPIs

It’s not just the foreigners. Domestic mutual funds and insurance companies have also turned net buyers in the last two weeks, adding another ₹18,000 crore in equities. SIP inflows continue to hit record highs, further boosting market liquidity and depth.

Rupee Stability and Bond Market Impact

The Indian rupee has remained relatively stable around 83.3 per dollar, aided by the FPI inflows. Meanwhile, the bond market has also seen minor inflows, although most of the action remains concentrated in equities for now.

The 10-year bond yield is hovering around 7.1%, with limited volatility thanks to RBI’s liquidity management measures.

Global Context: How India Stands Out

Compared to other emerging markets such as Brazil, Indonesia, and South Korea, India remains the most favored FPI destination in Asia right now. China's uncertain regulatory environment and slower post-COVID recovery continue to divert global money to Indian shores.

“India is benefiting from both global diversification and domestic outperformance. It remains the best structural story in the EM space today,” said Mike Chen, Fund Manager at Zenith Global Fund.

What Should Retail Investors Do?

Retail investors watching this FPI-led rally should tread cautiously. While the underlying momentum is strong, chasing overheated stocks can backfire. Analysts recommend:

• Staying diversified

• Avoiding speculative smallcaps

• Sticking to fundamentally strong sectors

• Using SIPs to average out during volatility

The ₹44,000 crore inflow by FPIs over just 14 sessions underscores a deeper shift in perception about India’s market resilience. Despite the heightened India-Pakistan tensions, foreign investors are clearly prioritizing India’s macroeconomic stability, growth visibility, and long-term reform trajectory.

Whether this trend sustains or pauses depends on several variables including global interest rates, oil prices, and local political stability. But for now, the message is clear — India remains a hot favorite in the global investment map, even under pressure.