FPIs pour ₹32,000 crore into Indian stock market in 6 sessions as valuations turn attractive

Indian stock market: Overseas investors have reversed their bearish outlook on the Indian stock market in the second half of March 2025, remaining net buyers in seven out of the last nine sessions, causing frontline benchmark indices, Sensex and Nifty 50, to recover from their worst selling streaks in the last 30 years.

They pumped net ₹11,111 crore into the stock market in the last trading session, which was the biggest single-day inflow of the current calendar year. Prior to this, foreign portfolio investors (FPIs) bought ₹21,465 crore worth of Indian equities in five sessions, taking their six-day total to ₹32,576 crore.

Between October 2024 and February 2025, FPIs pulled out more than ₹3 lakh crore from the Indian stock market, driven by concerns over lofty valuations and weak corporate earnings. This heavy outflow led the Nifty 50 and Sensex to decline by 15% from their respective highs. The last instance of FPIs being net buyers was in September, when they infused ₹15,432 crore.

Meanwhile, to bring more inflows back to India, the Reserve Bank of India (RBI) is set to double to 10% a cap on investment by individual foreign investors in listed companies, according to a report by Reuters.

What triggered the FPI turnaround?

FPI sentiment has begun to shift as valuations started coming down from their previously elevated levels, bringing them more in line with fundamentals following the recent correction. This adjustment has helped restore investor confidence, potentially paving the way for renewed inflows into the market.

In addition, escalating global trade tensions, which were initiated by Donald Trump, have led the U.S. Dollar Index to tumble 6% from recent highs. Experts believe this has limited capital inflows back into the U.S.

Additionally, the US Federal Reserve, in its March meeting, maintained its projection of two rate cuts for 2025, which puts emerging markets in the spotlight, as lower US interest rates typically bring inflows back to developing economies.

Moreover, macroeconomic factors are also improving, such as easing inflation in February, which has raised hopes for another rate cut by the RBI in its upcoming April meeting. These hopes have strengthened as the Indian central bank has been taking aggressive steps to improve liquidity in the financial system.

Rising trade tensions, which expose India to U.S. reciprocal tariffs, have not dampened market sentiment, as India is in active discussions with the White House to avoid the tariffs set to take effect from April 2. Meanwhile, Trump had earlier indicated that he may grant 'a lot of countries' exemptions from reciprocal tariffs.

Strong inflows propel Nifty 50 to its biggest monthly gain in 8 months

The Nifty 50 has closed in the green in six of the last seven trading sessions, surging 5% and taking its March gain to 6.21%. The last time the index posted a similar monthly gain was in June 2023, when it jumped 6.57%.

Notably, it has outperformed major global peers in this rally, as U.S. benchmark indices, the S&P 500 and Dow Jones Industrial Average, have declined by up to 4% this month.

It has also outperformed its Asian counterparts, with China’s SSE Composite Index rising just 1%, while major Asian exchanges, such as Hong Kong’s Hang Seng, have gained 2.18%—significantly lower than the Nifty 50’s rally.

The broader markets, which were among the biggest casualties in the recent market meltdown, have recovered, with the Nifty Midcap 100 index gaining 11% in March, while the Nifty Smallcap 100 index has soared 14% in the same period.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.