FPIs Infuse ₹18,620 Crore Into Indian Equities by May 16 – Top 5 Reasons Behind the Surge.

The Indian stock market is back in the spotlight, and in a big way. By May 16, foreign portfolio investors (FPIs) had pumped a massive ₹18,620 crore into Indian equities, marking a sharp turnaround after months of pulling back. It’s a strong sign that global investors are again confident about India’s economic outlook.

May 15 marked a standout day for Indian equity markets. The Sensex surged by 1,200 points, while the Nifty crossed the 25,000 mark—buoyed by a broad-based rally in financials, autos, and IT stocks. It wasn’t just a one-off spike; several underlying factors have been building up to this moment.

Let’s take a closer look at the key drivers behind the recent market upswing.

1. Foreign Investors Make a Strong Comeback

After a period of caution, Foreign Portfolio Investors (FPIs) have returned with renewed interest. Between May 13 and 16, FPIs invested ₹4,452.3 crore in Indian equities, as per NSDL data.

What’s behind the shift? A mix of attractive valuations across key sectors and India’s relatively resilient economic backdrop. In uncertain global conditions, India appears to be offering a blend of stability and growth—two qualities investors don’t ignore for long.

2. Domestic Economic Indicators Look Encouraging

On the macro front, India has delivered a string of positive signals. Headline inflation dropped to 3.34% in March—the lowest in nearly six years—opening the door for monetary easing. In April, the RBI cut interest rates by 25 basis points and adjusted its stance from “neutral” to “accommodative,” suggesting that more rate cuts could be on the table if conditions hold.

Additionally, April GST collections hit a record ₹2.37 lakh crore, marking a 12.6% year-on-year increase. That kind of growth points to stronger consumer demand and improved tax compliance—both healthy signs for the broader economy.

3. Supportive Global Cues

External conditions have also turned favorable. The U.S. recently paused some tariffs, and expectations of interest rate cuts by the Federal Reserve have grown stronger. Meanwhile, the U.S. Dollar Index has fallen from 111 in January to below 100—making Indian markets more attractive for global investors seeking better risk-adjusted returns.

4. Financial Sector Leading the Charge

Among all sectors, financial stocks have emerged as clear outperformers. In April alone, FPIs invested ₹18,409 crore in the financial sector—the third-highest monthly inflow ever recorded.

This momentum has translated into performance as well. The Nifty Financial Services Index gained 4.1% in April, reflecting growing confidence in the sector’s earnings outlook and balance sheet strength.

Private banks like HDFC and ICICI delivered solid earnings, fueling the fire. And it’s not just finance; consumer goods and telecom also see strong foreign inflows, pointing to a broad-based recovery.

5. Political Stability and Rising Local Interest

The political picture matters, too. After the 2024 elections, expectations of the BJP continuing in power brought a sense of policy stability, something investors always welcome.

On the home front, Indian retail investors are more active than ever. The number of demat accounts has jumped by about 16%, from 11.18 crore in November 2022 to 12.92 crore a year later. Mutual funds also see more action, helping cushion the market during shaky times.

Looking Ahead

With so many positives lining up – foreign investments, a strong economy, global tailwinds, sectoral strength, and political clarity – the Indian stock market seems set for more gains. That said, global uncertainties haven’t vanished. So it’s still smart to stay diversified and cautious.

Bottom line? Things are looking good, but make sure you’re making informed choices. Talking to a financial advisor before making significant investment moves is always wise.