FPIs infuse? 5260 cr in Indian equities this week: NSDL

Mumbai, July 12, 2025: Foreign Portfolio Investors (FPIs) have injected a robust ₹5,260 crore into Indian equities this week, according to data released by the National Securities Depository Limited (NSDL). The positive momentum reflects a strong resurgence in overseas investor confidence, driven by macroeconomic stability, corporate earnings optimism, and favorable global cues.

A Turnaround After Cautious Trading

The latest inflows mark a significant shift from the previous weeks, where foreign investors had largely remained on the sidelines amid global uncertainty and profit booking. As per NSDL data, the inflows were concentrated in sectors such as banking, capital goods, FMCG, and automobiles — areas seen as direct beneficiaries of India’s domestic consumption and investment-led growth story.

"This week’s numbers clearly indicate that FPIs are regaining their appetite for Indian equities," said Ravi Singh, Market Strategist at TejiMandi Analytics. “The stability in the Indian rupee, strong Q1 earnings, and easing inflationary pressures in the US are collectively improving risk sentiment toward emerging markets like India.”

Global Risk Sentiment Improving

FPIs have been responding positively to improving macroeconomic indicators in major economies, especially the US and China. The US Federal Reserve's recent dovish tone, along with expectations of rate cuts in late 2025, has also revived interest in risk assets, particularly in emerging markets.

The US dollar index slipped slightly this week, and US 10-year bond yields softened to near 4.05%, both of which favor FPI investments in markets like India. In addition, cooling crude oil prices and resilient domestic macroeconomic fundamentals have contributed to the upbeat sentiment.

Domestic Factors Driving Confidence

India’s equity market continues to remain an attractive destination for global investors due to its strong GDP growth, stable political outlook, and reforms-centric policy environment. The recently released Q1 FY26 results from several frontline companies have beaten street expectations, adding to the bullish tone.

"FPI flows are reflecting the optimism in Indian earnings and the clarity on government continuity after the elections," noted Aparna Jain, Head of Equity Research at Geojit Financial Services. "We believe this trend will sustain if global volatility remains contained."

According to NSDL data, the total net FPI investment in equities so far in July 2025 stands at around ₹7,820 crore. This includes this week’s ₹5,260 crore infusion, indicating a continuation of the buying trend that began in late June.

Sectoral Favorites of FPIs

The inflows have not been evenly distributed across sectors. FPIs have been seen accumulating shares in high-growth sectors such as:

• Banking and Financial Services: Benefiting from credit growth and stable NIMs.

• FMCG: A hedge against volatility, with stable demand outlook.

• Capital Goods and Industrials: Riding the wave of infrastructure push and Make-in-India schemes.

• Auto and Auto Ancillaries: Gaining from volume growth and EV penetration.

"FPIs are diversifying their India portfolio — combining growth with defensiveness,” said Siddharth Shah, Investment Strategist at Motilal Oswal AMC. “They are not just chasing returns but also repositioning for long-term exposure."

Broader Market Context

The Indian benchmark indices, Sensex and Nifty 50, posted modest weekly gains, with the Nifty 50 closing above the 25,600-mark. Broader indices like the Nifty Midcap and Smallcap also witnessed traction, aided by strong FPI flows and retail participation.

The rupee remained stable in the 83.3–83.5 range against the dollar, and volatility indices stayed subdued, indicating a healthy risk appetite in the market.

Outlook: Will the Trend Sustain?

While the near-term momentum looks favorable, analysts caution that global macro risks could still trigger volatility.

“Inflows may moderate slightly if geopolitical tensions or oil price shocks return,” warned Rahul Arora, CEO of Nirmal Bang Institutional Equities. “But on balance, India remains one of the top destinations for foreign capital in Asia.”

The upcoming US inflation data, Fed commentary, and monsoon progress in India are some of the key variables that could influence future flows.

If the macro backdrop remains stable and corporate earnings continue to meet expectations, analysts expect FPI inflows to cross ₹20,000 crore in equities by the end of July.

The ₹5,260 crore infusion by FPIs into Indian equities this week marks a decisive return of foreign interest in the domestic stock market. As India continues to present a compelling mix of growth, stability, and policy continuity, market participants remain optimistic about sustained foreign inflows in the coming weeks.