FIIs pump Rs 23,778 cr into Indian stocks in May. Is more buying seen ahead?

Synopsis

Foreign Institutional Investors (FIIs) have significantly increased their investments in Indian equities, with net purchases of Rs 23,778 crore through May 16, 2025, following a shift in April. This buying momentum is fueled by easing geopolitical tensions, improved global trade relations, and India's robust growth prospects. Experts anticipate continued FII buying, supported by controlled inflation and expected rate cuts.

Foreign Institutional Investors (FIIs) have continued their buying spree in Indian equities, with purchases amounting to Rs 23,778 crore through May 16, 2025. This comes after a notable shift in FII strategy in April, where they reversed their selling stance and recorded net purchases of Rs 4,243 crore.

The data was highlighted by Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, who observed a marked change in FII behavior during the second quarter of 2025.

Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, pointed out that “FIIs who were sellers in the first three months of 2025, having sold equity for Rs 116,574 crores during this period, turned buyers in April with buy figure of Rs 4,243 crores.”

The buying momentum, according to him, has accelerated further in May, driven by easing geopolitical tensions and stabilizing macroeconomic conditions.

“This change in FII strategy from selling to buying accelerated in May with big buying of 23,778 crores through 16th May,” he added.

The recent inflows come amid improving trade relations globally, particularly following the pause in the US-China trade conflict and the resolution of the India-Pakistan border tensions.

“With the global trade scenario improving after the pause in trade war between the US and China and the end of the India-Pak conflict, the investment scenario has improved,” Vijayakumar noted.

Despite challenges in major economies like the US, China, Japan, and the EU, India’s growth prospects remain robust, with the country expected to clock a growth rate of above 6% in FY26.

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Highlighting the favorable domestic macro environment, Vijayakumar stated, “Importantly, with inflation in India very much under control and the MPC expected to cut rates twice or thrice more in this rate-cutting cycle, the macro construct in India looks good.”

With the expectation of further rate cuts and continued buying interest from FIIs, Dr. Vijayakumar anticipates that “going forward, FIIs are likely to continue their buying in India. Therefore, large caps will be resilient.”

The strong inflows signal increasing investor confidence in India’s economic stability, potentially providing further support to the ongoing market rally.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)

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