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Foreign institutional investors (FIIs) have returned to Indian equity markets with renewed optimism, recording net positive inflows for two consecutive months, latest data from NSDL shows. In April (as of April 29), FIIs invested Rs 10,558.97 crore, following Rs 1,717.78 crore in March. This marks the second consecutive month in which FIIs have been net buyers. This is a significant shift from the heavy selling seen earlier in the year, when FIIs pulled out Rs 46,599.08 crore in February and Rs 72,677.21 crore in January. NSDL data for April 30 is currently unavailable. As per provisional NSE data, on April 30, FIIs extended their buying streak to an eleventh straight session, purchasing Indian equities worth Rs 50 crore.

On the positive flow trends, Tradejini's Trivesh D noted that the reversal in FII flows is due to international factors such as softening US inflation and anticipated Federal Reserve rate reductions, which sharpened risk appetite for emerging markets.

"Domestically, India's GDP growth has estimate of 6.5% in FY2025, a stable rupee, and policy stability after elections have improved investor confidence. Also, the Nifty's return to its 10-year average P/E ratio of 22x made Indian equities more attractive following corrections, leading to an increase in FII inflows," he added. Going ahead, global risks for flows, he added, could be US rate hikes or geopolitical tensions, along with domestic risks such as inflation spikes or policy missteps, could dampen sentiment. "Market risks, like sudden FII profit-booking, could trigger outflows, but DIIs will likely mitigate the impact," he added.

In 2025 so far, on an overall basis, domestic institutional investors (DIIs) have  invested a total of Rs 2.1 lakh crore in Indian equities. Meanwhile, foreign institutional investors (FIIs) have pulled out Rs 1.07 lakh crore during the same period. In 2024, domestic institutional investors (DIIs) invested a total of Rs 5.23 lakh crore in Indian equities. In contrast, foreign institutional investors (FIIs) withdrew Rs 8,001.16 crore during the year. Moneycontrol had recently reported that as of the March 2025 quarter, DIIs held around 16.91 percent of Indian equities, slightly overtaking FIIs whose holdings dropped to around 16.84 percent—a 50-quarter low—according to data from ACE Equities.  With this, the assets under custody of DIIs stand at around Rs 69.80 lakh crore, while those of FIIs are around Rs 69.58 lakh crore.

FII flows improve

During the month of April, FII flows also reached the highest inflows in 4 months after seeing inflows of Rs 11,085 crore in December 2024. The turnaround, experts believe, reflects improving global sentiment, as concerns over interest rate hikes ease and geopolitical risks begin to moderate. At the same time, Domestic institutional investors (DIIs) have continued to support the markets through this period. In March, DIIs invested Rs 37,585.68 crore, followed by Rs 23,905.87 crore in April.

In a recent interaction with Moneycontrol, SEBI Chairperson Tuhin Kanta Pandey noted that the overall mood has been very positive. "I met plenty of FPI investors in Washington DC, in New York, in Boston… there were very positive things about India in the meetings that we had under the Financial Stability Engagement Group, under the IMF-IOSCO track,” Pandey said adding that over the last five years FPIs have invested $58 billion across equity and debt in the last five years.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

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