Foreign Portfolio Investors Drive Indian Stock Market Recovery Amid Global Volatility

Foreign portfolio investors (FPIs) maintained their position as net buyers in the Indian stock market through July, according to recent data from the National Securities Depository Limited (NSDL). They have purchased domestic stocks valued at Rs 3,839 crore so far this month.

After investing Rs 4,223 crore in April, Rs 19,860 crore in May, and Rs 14,590 crore in June, FPIs have been pivotal in the recent market surge following previous downturns. The benchmark Sensex is still significantly below its record high of 85,978 points.

The Sensex lags by about 3,500 points from its highest level, having previously dropped nearly 13,000 points during market turbulence. Indian stock markets have surpassed global performance in recent weeks amid continued fluctuations due to potential U.S. reciprocal tariffs.

VK Vijayakumar, Chief Investment Strategist at Geojit Investments, noted that FPI inflows were negative earlier this year but saw a positive reversal in later months. He emphasized a notable trend of FPIs consistently buying in primary markets despite selling through exchanges.

Vijayakumar warned of potential short-term shifts as foreign investors might capitalize on cheaper global markets compared to India. Despite underperforming against the MSCI EM index in H1 2025, the Sensex and Nifty gained 9-10% in 2024 and 16-17% in 2023, following a modest 3% rise in 2022.

(With inputs from agencies.)