Foreign investors invested about Rs 31,000 crore in Indian equity markets in the last 6 trading days of this month. This is mainly due to attractive valuations, strengthening of rupee and improvement in macroeconomic indicators. The benchmark index Nifty recovered strongly by about 6 percent as foreign portfolio investors (FPIs) re-emerged as buyers, reflecting new confidence in the market.
This fresh investment also helped reduce the total withdrawals by FPIs to Rs 3,973 crore in March, according to depository data. This is a big improvement compared to the previous months, as FPIs had withdrawn Rs 34,574 crore from Indian stocks in February and Rs 78,027 crore in January.
Further action will depend on US tariffs
According to news agency PTI, VK Vijayakumar, Chief Investment Strategist at Geojit Investments, says that the further movement of FPIs will mainly depend on US President Donald Trump's reciprocal tariffs expected on April 2. If the tariffs are not severe, the rally may continue. According to data, FPIs have withdrawn Rs 3,973 crore from Indian equities in March. However, in the last 6 trading sessions (from March 21 to March 28), they invested Rs 30,927 crore.
According to Vijayakumar, the shift from persistent selling to modest buying indicates a change in FPI strategy. This is influenced by factors such as attractive valuations after a 16 per cent correction from the September 2024 peak, recent strengthening of the rupee, and favourable macroeconomic indicators such as GDP growth, industrial production, and retail inflation.
Manoj Purohit, Partner and Leader (FS Tax, Tax and Regulatory Services), BDO India, said that SEBI has made some major announcements related to FPI communication in its board meeting, which has made them excited about investing in India. Himanshu Srivastava, Associate Director-Manager Research, Morningstar Investment, said that the reason for the recent investment of FPI is India's strong performance on the economic front and the confidence of investors.
