FIIs inject over ₹16,400 crore in Indian equities amid geopolitical thaw 

Foreign Institutional Investors (FIIs) infused more than ₹16,400 crore into Indian equities this week, marking a significant turnaround after their massive sell-off on May 9 when India-Pakistan tensions escalated.

Data from stock exchanges revealed that FIIs purchased Indian stocks worth ₹5,392.94 crore on May 15 and ₹8,831.05 crore on May 16, following modest inflows of ₹1,246.48 crore on May 12 and ₹931.80 crore on May 14. This comeback follows their considerable selling of ₹3,798.71 crore on May 9.

According to Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, “The hallmark of FPI investment in recent days has been the sustained buying by FIIs. FIIs bought equity through the exchanges consecutively for 16 trading days ending 8th May for a cumulative amount of ₹48,533 crores.”

The ceasefire agreement between nuclear-armed neighbors India and Pakistan has significantly improved market sentiment. “Now that ceasefire has been declared, FIIs are likely to resume their equity purchases in India,” Vijayakumar added.

Shrikant Chouhan, Head of Equity Research at Kotak Securities, confirmed that “FIIs continued to be net cash buyer to the tune of ₹14,951.59 crores, to date in May’25.” He attributed the positive market performance to “expectations of a steady ramp-down of US tariffs after the trade deal between the US and the UK.”

Domestic Institutional Investors (DIIs) also demonstrated strong buying interest, with purchases worth ₹7,277.74 crore on May 9 when FIIs were selling, followed by inflows of ₹1,448.37 crore on May 12, ₹316.31 crore on May 14, and a significant ₹5,187.09 crore on May 16. DIIs were net sellers only on May 15, offloading stocks worth ₹1,668.47 crore.

Himanshu Srivastava, Associate Director – Manager Research at Morningstar Investment, explained that “Indian equity markets witnessed strong FII inflows this week as well, driven by a combination of global tailwinds and improving domestic fundamentals. The sustained buying spree that began in mid-April continued, reflecting renewed investor confidence.”

Vinod Nair, Head of Research at Geojit Investments Limited, described the week as “spectacular,” noting that “major indices posted their strongest single-day gains in over four years.” He highlighted that “key sectors such as defence, NBFCs, and automobiles significantly outperformed the broader market, driven by renewed investor confidence in an improving business outlook.”

Market analysts point to multiple factors supporting the positive sentiment. India’s April inflation moderated to 3.2 per cent from March’s 3.3 per cent, marking the lowest reading in six years. Expectations of a normal monsoon and declining crude oil prices are anticipated to further ease inflationary pressures, potentially allowing the Reserve Bank of India to maintain its accommodative monetary policy stance.

Hardik Matalia, Derivative Analyst at Choice Broking, noted that FIIs had been net buyers for sixteen consecutive sessions before turning net sellers on May 9.

However, experts warn that the FII inflow pattern might remain volatile. Chouhan cautioned that “FPI flows are expected to remain volatile,” while Srivastava pointed out that “improving US-China trade relations may lead FIIs to reassess their investment strategies, potentially diverting funds to other markets.”

The global risk appetite has improved following a 90-day tariff truce between the U.S. and China, prompting foreign investors to reallocate capital toward emerging markets, with India being a key beneficiary.

Meanwhile, retail investors, categorized as “Clients” in BSE data, continued their net selling trend, offloading stocks worth ₹876.37 crore on May 15 and ₹529.64 crore on May 16. The proprietary trading segment, which includes trading by brokerages, maintained a net buying stance throughout the week.

Looking ahead, investors will closely monitor upcoming Indian PMI data and U.S. jobless claims to assess the momentum of economic recovery both domestically and globally.

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Published on May 17, 2025