FPI Selling Streak Ends in June: Outflows Decline to ₹3,064 Crore – When Will Inflows Resume?

Keywords: FPI, Foreign Portfolio Investors, equity, stock market, outflow, inflow, India, June, investment, market sentiment

After months of relentless selling, Foreign Portfolio Investors (FPI) finally saw a decline in their outflows from the Indian equity market in June. Outflows in the month stood at ₹3,064 crore, a significant decrease from the previous month’s ₹50,978 crore, as per data from the National Securities Depository Limited (NSDL). This marks the end of the FPI selling streak that had gripped the market since early 2023.

Reasons behind the declining outflows:

Global interest rate hikes: With the US Federal Reserve signaling a pause in rate hikes, fears of further aggressive tightening have eased, leading to some reversal of capital flows back into emerging markets like India.
Strong macroeconomic fundamentals: India’s robust economic growth and stable currency have also made it an attractive investment destination despite global uncertainties.
Improved market sentiment: A positive outlook for the Indian economy and corporate earnings has boosted investor confidence.

When will inflows resume?

While the recent decline in outflows is a positive sign, it remains to be seen whether inflows will resume anytime soon. Several factors will determine the future direction of FPI investment in India:

Global economic outlook: Continued geopolitical tensions and high inflation remain major concerns, which could impact investor sentiment.
Domestic policy measures: Government policies aimed at attracting foreign investments and boosting economic growth will be crucial.
Market performance: Continued strong performance of Indian equities will be vital to attract foreign investors.

The future of FPI investment in India will depend on a delicate balance of global and domestic factors. While the recent decline in outflows is encouraging, it is too early to declare a complete turnaround. The market awaits clarity on global economic uncertainties and strong domestic policies to ensure sustained inflows.