Will FPIs start buying Indian Equities?

Nifty surged in the last week of March after a heavy outflow of FPIs in the early months of 2025. Nifty has recovered almost 1500 points after the buying of Indian Equities. However, this buying is still doubtful because it could be affected by US President Donald Trump’s tariff policies, and global economic uncertainty continues.

FPI Heavy Selling 2025

Foreign portfolio investors (FPIs) have started 2025 on a negative note, leaving Indian investors disappointed. Their selling has come at a time when Indian markets are seeing a sharp correction. This has happened due to high valuations and global uncertainties.

After March 21st, FIIs changed their approach from heavy selling to modest buying, continuing this trend until the trading day on March 28th. This shift helped the Nifty rally by 6%. The reason behind this was that market valuations became more attractive after a nearly 16% correction from the peak in September 2024. 

Also, the recent appreciation of the rupee made Indian markets more appealing compared to US investments. On top of that, key economic indicators like GDP, IIP, and CPI inflation showed improvement, which gave a positive push to the market.

Which Factors Will Affect FPI Sentiment?

Foreign investors have started buying in the Indian market over the last six trading sessions. But the key thing to watch now is whether they will continue this buying trend. Their decision will depend on a few critical factors that could impact their overall sentiment.

Trump's New Tariff Plan

The market mood is still weak, and one big reason is that US President Donald Trump announced a new tariff policy starting April 2. Earlier, people thought these tariffs would apply to just 10–15 countries, but now they will apply to all. This new strategy is aimed at protecting US manufacturing and balancing global trade. It is also seen as a move to support domestic priorities ahead of the 2024 elections.

Volatility to Persist Amid Global Risks

Even though there was some buying in Indian stocks towards the end of March, the overall outlook still looks uncertain. This is mainly because of global trade tensions, rising inflation, and US interest rate policies, which are affecting investor mood. Because of these reasons, market ups and downs are likely to continue.

Outlook On FPI’s Buying

In my opinion, FPI investment in Indian stocks is still quite unstable, but the money that came in during late March gave some short-term relief. Looking ahead to 2025, I feel there will be a lot of ups and downs because of global trade issues and economic conditions. 

With Trump’s new tariff plans and high stock prices in India, foreign investor confidence might stay weak for now. I think people in the market will keep a close eye on global trade news and interest rate decisions to understand where FPI flows are heading next.