FPIs show strong buying momentum in Indian equities in the second half of March

FPIs remained net sellers of Indian equities in March for the third consecutive month but there was a sharp deceleration in the outflow due to strong buying in the second fortnight of the month. They invested net Rs 26,042 crore ($3,037 million) in the second half of March, a sharp contrast to the outflow of Rs 30,015 crore ($3,438 million) in the first fortnight. As a result, net outflow for the full month reduced to Rs 3,973 crore ($401.2 million). The extent of investment by foreign investors in the coming months will depend upon several factors including the tariff stance by the Trump administration and its impact on global trade, attractiveness of the Indian economy relative to the US, which is facing recessionary pressure and the valuation comfort of the domestic equities.

In March, FPIs sold Rs 6,027.8 crore ($637.3 million) of equities in the secondary market and made purchases worth Rs 2,055.2 crore ($236.1 million) in the primary market. For the fiscal year 2024-25 (April-March), they were net sellers of equities worth Rs 1,27,041 crore ($14,626 million) including primary and secondary markets. This was the second largest outflow following FY22 when they had sold equities worth Rs 1,40,010 crore ($18,468 million).

Compared with the FPIs, domestic funds showed a contrasting trend. Their net equity investment for the full month of March was Rs 9,147.6 crore, lower than Rs 13,516.6 crore that they had invested till March 07. This means the local funds offloaded equities in the remainder of the month even while their foreign counterparts increased buying during the period. Domestic funds invested a record Rs 4.7 lakh crore in equities in FY25.