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Foreign Institutional Investors (FIIs) continues their buying streak for twelfth consecutive session on Friday with fresh equity investments totaling ₹2,769 crore.

This comes after a significant selloff in the first quarter of 2025, during which foreign institutional investors (FIIs) offloaded Indian stocks worth ₹1.29 lakh crore.

However, sentiment appears to be shifting. In April, FIIs made a cautious return as net buyers, investing ₹3,243 crore. Supporting this trend, provisional data shows that domestic institutional investors (DIIs) also contributed to the upward momentum with net purchases of ₹3,290 crore on May 2, as per data available on NSE.

"Foreign Institutional Investors (FIIs) are demonstrating a positive investment trend in India, driven by factors that outweigh concerns despite escalating India-Pakistan tensions. The "There Is No Alternative" (TINA) factor continues to play a significant role globally, making India an attractive destination for foreign capital," said Prashanth Tapse, Sr VP Research Analyst at Mehta Equities Ltd.

During the first three months of 2025, FIIs have been big sellers through the exchanges. Cumulatively FIIs sold equity for ₹1,29,680 crores during this 3-month period. In April FIIs turned buyers having bought equity for ₹3,243 crores.

According to experts, there are four key reasons explain this shift in FII strategy.

First, President Trump’s declaration of a 90-day halt on reciprocal tariffs triggered a rebound in global equity markets, during which India showed stronger performance than others.

Second, the decline in the US dollar disrupted and reversed the momentum-driven trade in favor of the US that had emerged following Trump’s election victory. The sharp drop in the Dollar Index—from 111 on January 11 to 99 recently—encouraged foreign institutional investors to shift funds into emerging markets, especially India.

Third, in addition to the factors mentioned above, stronger-than-expected Q4 earnings—especially from the banking sector—and accommodative monetary policies from the Reserve Bank of India have boosted confidence in the Indian market, helping maintain steady interest from foreign institutional investors (FIIs).

Fourth, the "There Is No Alternative" (TINA) factor remains a key driver globally, positioning India as an appealing destination for foreign investment. Investor confidence has been further strengthened by the optimism surrounding a potential U.S.-India trade agreement, which is expected to boost economic relations between the two nations.

“FII inflows can remain stable, but will be constrained by the modest earnings growth of around 5% in FY25,” said Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited.

Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.

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