FIIs Pump Rs.14,670 Crore Into Indian Stocks in 3 Days: What’s Fueling the Surge?

The primary index, NIFTY50, reached an intraday high of 24,190 on April 21, 2025, as it reclaimed the 24,000 level for the first time since January 2025. While the upward trend in the primary indices indicates growing trust in the Indian stock market, another parameter reinforcing this positive pattern is the return of Foreign Institutional Investors (FIIs).

Foreign Institutional Investors (FIIs) pumped an investment of Rs. 14,670 crore in the Indian cash market over the previous three trading sessions as of 21st April 2025. What is driving this comeback, and how will it likely affect the investors? Let’s decode.

Understanding the Shift in FII Sentiment:

The Indian stock market recently experienced a strong resurgence of foreign capital, with Foreign Institutional Investors (FIIs) injecting Rs. 14,670 crore into the cash market between April 15th and 17th, 2025. This marks a sharp shift from the previous trend, where Foreign Portfolio Investors (FPIs), a category that includes Foreign Institutional Investors (FIIs), were net sellers for nine straight trading sessions as of April 16, 2025, pulling out a total of Rs. 38,992 crore.

Here, net sellers mean they were selling more shares than they were buying, signaling reduced confidence or a cautious outlook. In contrast, being net buyers, as seen now, shows renewed optimism and a willingness to invest more in Indian equities.

Previously, the last major instance of FII buying occurred on March 27th, when they invested approximately Rs. 11,111 crore. The recent inflow not only breaks the selling streak but also exceeds the previous high, indicating stronger conviction among foreign investors. This sudden turnaround suggests a significant shift in how global investors view India’s market potential. It means growing confidence and reassessing the risks and opportunities associated with investing in the country.

So, what’s driving this change in sentiment?

Drivers Of Changing Market Sentiment:

1. Weakening US Dollar:

The US Dollar Index (DXY), which measures the dollar’s strength against other major currencies, recently dropped to around 100. A weaker dollar has several important implications for global investors.

When the dollar weakens, returns from non-dollar assets, like Indian stocks, become more attractive to foreign investors. This is because when these investors eventually convert their investment gains back into their home currency, they receive a better exchange rate, which enhances their risk-adjusted returns. In simple terms, a weaker dollar increases their purchasing power in India and boosts their potential profits.

Additionally, a falling dollar often signals easier monetary conditions globally. This encourages investors to shift their capital to emerging markets, such as India, which offer relatively higher growth and better yields. So, the weakening dollar is acting as a direct incentive for foreign investors to park more money in Indian equities.

2. India’s Strong Growth Outlook

Another major reason behind the recent rise in FII activity is India’s solid economic growth outlook. At a time when many major global economies, such as the US and China, are expected to post slower growth, India is projected to continue growing steadily. Estimates suggest the Indian economy could expand by around 6% in FY26, despite global headwinds. Plus, recent economic forecasts from key global institutions further reflect this continued confidence in India’s economy:

Institution	Projected Growth Rate	Year
World Bank	6.7%	FY26 & FY27
International Monetary Fund (IMF)	6.5%	2025 & 2026
Asian Development Bank (ADB)	6.7%	FY26
Fitch Ratings	6.4%	FY26

For FIIs, this signals strong potential for long-term capital appreciation. When an economy grows steadily, it generally translates to higher corporate earnings, improved business confidence, and better stock market performance, all of which make Indian equities more appealing.

3. Easing Global Trade Tensions:

Tariffs and trade barriers can disrupt supply chains, hinder economic growth, and add uncertainty, which many investors prefer to avoid. The recent tariff announcements by the US brought these elements in major economies in large numbers. However, the United States’ decision to delay the imposition of new tariffs by 90 days has helped calm nerves in the global markets.

With this temporary relief, markets are now breathing a little easier. Emerging markets, such as India, benefit from such developments, as global investors feel more confident about the broader economic outlook. The perception of reduced geopolitical risk and greater global stability encouraged foreign investors to revisit markets they might have avoided during times of tension. (Source: Mint)

4. Optimism Around Q4FY25 Corporate Earnings:

While there was initial caution around the earnings performance for the fourth quarter of FY25, largely due to subdued consumer demand and challenges in specific sectors, recent developments have led to a more positive market tone. Several companies have begun reporting their Q4 FY25 results, and early indicators from key sectors are showing encouraging trends. For instance-

Company	Parameter	Growth (%)
HDFC Bank	Net Profit	6.7%
ICICI Bank	Standalone Net Profit (YoY)	18%
Infosys	Revenue from Operations (YoY)	7.9%
Wipro	Net Profit (YoY)	25.93%

These results from large-cap firms in sectors like banking and IT are shaping expectations for a more stable earnings outlook. As more companies release their quarterly numbers, the overall picture of corporate performance is becoming clearer. This earnings momentum is being closely tracked by investors, including foreign institutional investors (FIIs), as they assess the market’s potential over the coming quarters.

5. RBI’s Pro-Growth Monetary Policy:

Alongside earnings optimism, the Reserve Bank of India’s recent rate cut (the REPO rate was reduced to 6% in April 2025) has provided a significant boost to investor confidence. Lower REPO rates and resulting decreased borrowing costs are also expected to stimulate demand across various sectors, including housing, autos, infrastructure, and small businesses.

For foreign investors, this shift toward monetary easing sends a strong pro-growth signal. It indicates that India’s central bank is focused on supporting economic momentum, making Indian assets more appealing from a risk-reward perspective.

6. Other Underlying Factors: 

• India’s relatively lower inflation and stable crude oil prices are offering better risk-adjusted returns compared to some other emerging markets. It is why some Foreign Institutional Investors (FIIs) are reallocating funds from different markets, such as China, to India, drawn by better growth prospects and economic stability.
• Foreign Institutional Investors (FIIs) and domestic investors are showing interest in sectors driven by domestic consumption, including financial services, telecom, aviation, cement, select auto stocks, and healthcare.
• The US is slowing down its tightening of monetary policy, which is helping improve global liquidity and making markets like India more attractive to investors.
• Policy support, such as the government’s Production-Linked Incentive (PLI) schemes and the China+1 strategy for supply chain diversification, is also contributing to sector-specific investment interest.
• Foreign Institutional Investors (FIIs) are selectively investing in mid-cap companies with strong fundamentals and long-term growth potential.

Bottomline:

The historical trend of FII investment in India reveals a market that remains sensitive to global economic conditions, with notable inflows and outflows during events like the global financial crisis and the COVID-19 pandemic. While FII activity contributes significantly to liquidity, shapes market sentiment, and supports economic development, it also introduces an element of volatility that investors must account for.

In this context, aligning portfolios with broader institutional trends may help reflect prevailing market momentum; however, it is equally important to factor in individual risk appetite, investment horizon, and diversification goals before finalizing any investment decision.

Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & the certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.