Foreign investors return to D-Street with ₹3,386 cr weekly inflows; will the momentum sustain?
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Foreign Portfolio Investors (FPIs) staged a comeback in Indian equities during the week ended June 19, emerging as net buyers after an extended period of selling, indicating a potential shift in overseas investor sentiment towards the domestic market.
According to provisional exchange data, FPIs infused ₹3,386 crore into Indian equities during the week. The buying pattern was marked by alternating activity through the week, with foreign investors turning buyers on Monday, Wednesday, and Friday, while trimming exposure on the remaining sessions.
Daily data shows FPIs bought shares worth a net ₹200 crore on June 15, followed by net sales of ₹749 crore on June 16. They returned as buyers on June 17 with purchases worth ₹102 crore before turning sellers again on June 18, offloading equities worth ₹1,025 crore. The week's biggest inflow came on June 19, when FPIs pumped in ₹4,859 crore, aided by passive fund adjustments linked to the FTSE quarterly index rebalancing.
FTSE quarterly rebalancing triggers a surge in passive fund flows
“This week witnessed a pivotal shift as Foreign Institutional Investors (FIIs) snapped a prolonged dry spell to emerge as net buyers, amounting to ₹3,386 crore. This reversal was characterised by a distinct alternate-day rhythm, with FIIs ramping up exposure on Monday, Wednesday, and Friday, culminating in an explosive surge of ₹4,859 crore on Friday alone, heavily catalysed by passive fund realignments during the FTSE quarterly rebalancing,” said Pabitro Mukherjee, Deputy Vice President – Research, Bajaj Broking.
The return of foreign capital comes at a time when Domestic Institutional Investors (DIIs) continue to provide a strong support base for the market. DIIs purchased equities worth ₹7,109 crore during the week, maintaining buying interest through most trading sessions before moderating their activity on Friday as foreign inflows surged.
The reversal in FPI flows coincided with a strong rally in Indian equities. Benchmark indices extended gains for a second consecutive week amid optimism surrounding a U.S.-Iran peace deal, easing crude oil prices, a recovery in the rupee, and supportive global cues. The Nifty 50 gained 1.7% during the week, while broader markets outperformed, with the Nifty Midcap and Smallcap indices rising 2.9% and 3.2%, respectively.
Rupee recovery, lower crude prices spark buying
Market experts believe currency stability has emerged as a key factor behind the renewed interest from foreign investors.
"There is a distinct change in FPI activity since June 15. For the week ended June 19, FPIs were net buyers of equities worth ₹3,386 crore in the cash market. It can be concluded that the relentless selling by FPIs in India is over," said V K Vijayakumar, Chief Investment Strategist at Geojit Investments.
According to Vijayakumar, the principal reason behind the shift is the stabilisation and gradual appreciation of the rupee. The Indian currency has recovered from a low of 96.96 against the U.S. dollar on May 20 to 94.34 as of June 19.
He expects additional dollar inflows through FCNR(B) deposits during FY27 and believes lower crude oil prices will help India finance its current account deficit without significant stress. "In the context of an appreciating rupee, FPIs are unlikely to sell significantly going forward," he said.
However, Vijayakumar cautioned that global investors continue to weigh opportunities across Asian markets. The concentration of investments in a handful of technology stocks in South Korea and Taiwan remains a concern, although the ongoing artificial intelligence-driven rally and strong earnings prospects of companies such as Samsung Electronics, SK Hynix, and TSMC continue to attract capital.
Ponmudi R, CEO of Enrich Money, said the return of foreign inflows marks a notable improvement in overseas investor sentiment after months of sustained selling pressure.
"The shift offers a constructive signal for domestic equities, particularly amid improving global risk appetite and easing geopolitical concerns," he said. He added that the combined strength of FPI and DII participation should continue to support market sentiment in the near term.
Looking ahead, market participants will closely monitor progress in U.S.-Iran negotiations, movements in crude oil prices and the rupee, along with key domestic macroeconomic indicators. Infrastructure output data, flash HSBC PMI readings, and foreign exchange reserve figures are expected to provide further clues on the health of the economy and the sustainability of the market rally.
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