Foreign investors have displayed renewed interest in Indian equities this week, injecting ₹1209 crore into the market between June 16 and June 20, according to the latest data from the National Securities Depository Limited (NSDL). However, despite this positive movement, the net outflow for June still stands at ₹4,192 crore.
The inflows during the week were primarily driven by significant buying activity observed on Wednesday and Friday. Market analysts attribute this trend to foreign investors participating in several block deals that were offered during the week. Additionally, the FTSE rebalancing, which occurred on Friday, also contributed to the increased inflow of foreign funds.
Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services, noted that the recent FPI (Foreign Portfolio Investment) inflows were fueled by buying activity in several block deals and the large inflows related to the FTSE rebalancing. He highlighted the strong fundamentals of the Indian economy, including healthy economic growth, multi-year low inflation, the Reserve Bank of India's (RBI) rate cut, and the prospect of an above-normal monsoon, as key factors bolstering investor confidence.
While the overall FPI flow for June remains negative, the situation has improved compared to the previous week ending on June 13, when the net outflows were higher at ₹5,402 crore. This reduction in outflows indicates a potential stabilization in the sentiment of foreign portfolio investors.
Khemka suggests that the recent inflows are a reflection of India's robust economic underpinnings. These factors collectively enhance investor confidence and encourage selective foreign investment, even amidst prevailing global uncertainties.
Looking ahead, both global and domestic factors are expected to play a crucial role in influencing FPI trends in the coming weeks. Geopolitical developments and fluctuations in crude oil prices, particularly amid tensions in the Middle East, will be significant global triggers to watch. Domestically, the progress of the monsoon season and any further policy announcements from the government and the RBI will likely impact investor sentiment and, consequently, FPI flows.
The Indian equity markets have witnessed fluctuating FPI trends in recent months. In the first half of June 2025, FPIs were net buyers of $816 million in Indian equities. However, this was only half of the amount recorded in the first half of May 2025. Notably, only two sectors attracted net inflows exceeding $500 million, while six sectors experienced net outflows of more than $100 million each, with four of these sectors seeing outflows greater than $200 million.
As of June 15, 2025, the Equity Assets Under Custody (AUC) stood at $831 billion, slightly lower than the $833 billion recorded on May 15. The overall AUC, including debt and hybrid instruments, also decreased to $907 billion from $912 billion.
In contrast, during the week of June 9 to June 13, FPIs had injected ₹3,347 crore into the Indian equity markets. Despite this, the overall FPI investment for June remained negative, with a withdrawal of ₹5,402 crore from Indian equity markets during that period.
The current situation reflects a cautious yet optimistic approach from foreign investors towards Indian equities. While global uncertainties persist, India's strong economic fundamentals and growth prospects continue to attract foreign investment. The coming weeks will be crucial in determining whether this positive momentum can be sustained and translate into a net positive FPI flow for June.
