FPI assets rose to $811 billion as of 30 April, up from $773 billion on 15 April. The surge came as FPIs turned net buyers of Indian equities for the first time in seven months. The rally was supported by a weaker dollar and optimism around the Indian economy’s potential to outperform amid signs of easing trade tensions—particularly the US nearing deals with India and other key partners.
At its lowest point, FPI AUM had dropped to a 15-month low of $714 billion on 28 February—its weakest level since November 2023—due to persistent outflows amid fears stoked by US President Donald Trump’s tariff proposals.
However, sentiment reversed by mid-April after the US paused its plan to hike tariffs on trading partners by 9 April. This boosted confidence among global investors, who responded with strong buying interest in Indian stocks.
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Nifty rebounds sharply
With FPIs turning buyers, the benchmark Nifty rebounded 12% from a 10-month low of 21,743.65 on 7 April to 24,334.20 by month-end. Domestic institutional investors (DIIs) continued to provide steady support, although at more modest levels.
DII cash market buying stood at ₹2,593 crore in the second half of April, compared with FPIs’ net investment of ₹37,546 crore. Retail and high net worth (HNI) investors also contributed significantly to the rally, according to Sudhir Joshi, consultant at Khambatta Securities. Monthly net figures for retail/HNI participation will be available later via NSE’s Market Pulse.
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Retail/HNI investors purchased shares worth ₹1.25 trillion in FY25 so far—the second-highest ever, after the record ₹1.65 trillion in FY22. As of FY25-end, NSE held a 94% share in the equity cash market segment.
FPI AUM had previously peaked at $930 billion as of 30 September 2024, helping lift markets to an all-time high of 26,277.35. However, the tide turned as US bond yields and the dollar strengthened on fears of rising inflation and a renewed global tariff war if Trump returns to office in November.
Markets corrected sharply through 7 April, with the Nifty falling 17% to 21,743.65. The tide turned again on 9 April when the Trump administration suspended tariff hikes for three months, raising hopes of near-term trade agreements.
Mixed market outlook
Tariff-related concerns may have eased, but fresh geopolitical tensions emerged this month after India and Pakistan engaged in a four-day air conflict that ended on 10 May.
The escalation followed the killing of 26 tourists in Kashmir last month by Pakistan-backed terrorists. Despite the flare-up, FPIs continued to buy Indian equities, buoyed by expectations that the situation would not spiral into a full-scale war.
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With a ceasefire agreement in the offing, and other positives like earnings growth recovery, low inflation, and easing interest rate cycle, FPI flows could “gather pace ” in the coming months, according to Nitin Jain, CEO & CIO, Kotak Mahindra Asset Management Singapore.
He added that markets could test their all time high of 26277.35 by the second half of next year, given the positive factors, while warning bets would be “off the table” if geopolitical issues “flare up.”
A Balasubramanian, MD & CEO, Aditya Birla Sun Life Mutual Fund, said he expected markets to test their record high in “quick time” with abatement of geopolitical tensions and global tariff uncertainty, and better than estimated earnings.
“Doubting Thomases still exist and that’s another reason that markets could surprise on the upside, led by robust smart money inflows,” said Balasubramanian.
However, others like Rohit Srivastava, founder of analytics firm Indiacharts, said a “pause in the latest round of recovery is likely before gauging market direction.” He forecasts a medium-term range of 24,000–25,000.
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Options data shows more call writing than puts, indicating upside resistance. Traders expect the Nifty to remain in a range of 24,640–25,360 in the near term, with a mild downward bias.
Weekly Nifty options data shows more calls sold than puts, which implies upside pressure. Based on this data, the market is likely to remain in the range of 24,640- 25,360, with an immediate downside bias.
