Overseas investors added another $6 million to their purchases on Wednesday, bringing their total buying for April to $1.3 billion. This marks a significant uptick compared to March, when net buying stood at $234 million, according to Bloomberg data.
The renewed inflow of foreign capital has also lent support to the Indian rupee, which surged by 76 paise against the US dollar, reaching 84.49. Wednesday’s gain in the rupee marked its largest single-day increase since November 2022.
Source: Bloomberg
According to market participants, the decisive buying by FPIs in April can be attributed to a weakening U.S. dollar and growing expectations of an early trade deal with the U.S. This comes after FPIs offloaded $5.4 billion in February and a larger $8.4 billion in January 2025.
Karthik Kumar, Fund Manager at Axis Mutual Fund, believes that Indian markets are likely to remain range-bound in the near term. He points to positive factors such as lower oil and commodity prices, a weaker US dollar, and easing selling pressure from foreign investors, who have recently turned net buyers. However, these positives are tempered by lingering uncertainties, especially concerning tariff policies and a potentially muted earnings season. “Markets can digest good or bad news, but it struggles with uncertainty,” Kumar added.
Also read: FIIs pour ₹17,060 crore into Indian equities in late April rally
Despite expectations of muted earnings growth in FY26, the outlook for further weakness in the US dollar and a projected 6% economic growth — even amid macroeconomic headwinds — continues to attract FPIs to the Indian market. The dollar index fell below 100 in April, marking nearly a 5% correction from its 26 March 2025 high of 104.5.
Among emerging markets, India was the only country to see inflows in April, while South Korea and Indonesia faced the highest outflows of $7 billion and $1.2 billion, respectively. Other emerging markets such as Thailand, Vietnam, and Brazil experienced outflows, each of around $500 million in April, according to Bloomberg data.
The selling by foreign investors, which began after September last year due to concerns over stretched valuations, is gradually reversing. India, the world’s fifth-largest market, is once again seeing strong interest. The Nifty50 index now trades at 21 times its one-year forward earnings, compared to the five-year average of 19.6x.
