Indian Stock Market Foreign Investors: Foreign Portfolio Investors (FPIs) began the first week of June on a weak note in the Indian stock market, with net investments remaining in negative territory. According to data released by NSDL, FPIs pulled out a total of ₹8,749 crore from Indian equities during the week from June 2 to June 6. This indicates that foreign investors were net sellers in the market for most of the week.
The withdrawal came amid global uncertainties and cautious investor sentiment. However, a sharp turnaround was seen on Friday after the Reserve Bank of India’s Monetary Policy Committee (MPC) announced a surprise rate cut of 50 basis points. The repo rate was reduced to 5.5 percent, which gave a strong boost to investor confidence.
Market experts believe that this aggressive rate cut will enhance India’s economic momentum and improve overall demand conditions. With inflation staying within the RBI’s comfort zone and the central bank signaling a pro-growth stance, FPIs are expected to increase their investments in the coming months.
Ajay Bagga, a banking and market expert, told ANI, “The first week of June saw a roller-coaster ride in terms of FPI flows. The trend is positive, as a weak US dollar is inversely correlated with EM flows. With Indian macro indicators showing strength and expectations of a 100 bps rate cut providing further momentum to the economy and aggregate demand, FPIs will likely rank India as a top investment destination. While valuations are quoted as a constraint, we see the growth potential eventually overriding these concerns.”
Although high stock market valuations remain a concern, experts say that India’s strong growth prospects may help overcome this challenge. Net foreign portfolio investment (FPI) inflows in May remained positive at ₹19,860 crore, making it the best-performing month so far this year in terms of foreign investment. Data from previous months also showed that FPIs had sold stocks worth ₹3,973 crore in March. In January and February, they had sold equities worth ₹78,027 crore and ₹34,574 crore, respectively.
