• Mon. Jul 14th, 2025

Foreign Investors Boost Indian Markets This Week

Bysonu Kumar

Jun 14, 2025

This week brought a surprising influx of capital into Indian stock markets, courtesy of foreign portfolio investors (FPIs). They poured in ₹3,346.94 crore, spurred by an optimistic atmosphere following a recent rate cut by the Reserve Bank of India (RBI).

Between June 9 and June 13, the mood among investors was uplifted, particularly in the early trading sessions. The RBI’s decision to lower the interest rate proved to be a catalyst for this surge in foreign investment. The reduction of the repo rate to 5.5 percent was unexpected and clearly put a positive spin on trading ventures.

However, as the week progressed and tensions escalated in the Middle East, specifically between Israel and Iran, the sentiment shifted. On the last trading day, which was Friday, there was a sharp pullback with FPIs pulling out ₹3,275.76 crore from Indian equities. This outsized withdrawal had a significant impact, causing the overall net inflows for the week to shrink.

This quick shift highlights how external geopolitical issues can influence investor behavior. In uncertain times, such as the ongoing conflict in the Israel-Iran region, FPIs often opt for safer investments, like gold, rather than remaining heavily invested in emerging markets like India. The risk-averse tendencies are understandable, especially with the volatility introduced by international relations.

Despite the week’s otherwise positive flows, the overall trend for June presents a different picture. Thus far, FPIs have withdrawn a net amount of ₹5,402 crore from Indian equity markets during the month. The initial enthusiasm generated by the RBI’s announcement seems to have been overshadowed by broader global instability.

The Monetary Policy Committee of the RBI was pivotal on June 6 when it announced a surprising cut of 50 basis points. This was a key moment that fortified investor confidence at least temporarily. During May 2023, FPIs had exhibited more favorable behavior, bringing in a net total of ₹19,860 crore, making it the best month for foreign investments this year.

To give some context, it’s worth noting previous trends in foreign investment into India. Earlier in the year, net foreign outflows were more pronounced. In March, FPIs offloaded stocks valued at ₹3,973 crore. January and February were particularly sluggish, with FPIs selling equities worth an alarming ₹78,027 crore and ₹34,574 crore, respectively.

Such numbers paint a broader picture of the foreign investment landscape in India, showing not only the challenges but also the rebounds. While this week may have brought in a significant influx, the abrupt end-of-week outflow raises questions about the sustainability of foreign investment in the near future.

As we await further data, it is crucial for investors to monitor geopolitical developments and their potential impacts on market sentiment. The stakes are high, and FPIs appear to be reacting more to external pressures than deviations in domestic monetary policy. It remains to be seen how the market dynamics will play out as we move further into the month.

For now, though, the infusion of ₹3,346.94 crore signals that moments of opportunity still exist for investors willing to navigate the turbulent waters. The surge illustrates a blend of hope in India’s growth potential and the challenges posed by unpredictable global circumstances. As the market remains in flux, we’ll need to keep an eye on both domestic developments and international events to assess their impact on future investments.

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