FIIs Invest Again as Confidence in India’s Growing Economy Rises
Foreign Institutional Investors (FIIs) have turned aggressive buyers in Indian equities this June, pumping in ₹8,915 crore (as of June 27) across the exchange, primary market, and other routes.
Mumbai: Foreign Institutional Investors (FIIs) have turned aggressive buyers in Indian equities this June, pumping in ₹8,915 crore (as of June 27) across the exchange, primary market, and other routes. Analysts attribute the strong inflows to positive global cues, a declining dollar, and robust domestic fundamentals.
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Global Sentiment Improves as Crude Declines, Dollar Weakens
The ceasefire between Israel and Iran, coupled with a sharp drop in crude oil prices, triggered a risk-on sentiment in global equity markets. At the same time, the US Dollar Index fell below the 97-mark, increasing risk appetite for emerging markets like India.
“A declining dollar is always a positive for emerging market equities; this encouraged FIIs to buy in India,” said Dr. V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
FIIs Focus on Financials, Capital Goods, and Realty
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FIIs were seen making heavy purchases in sectors such as:
- Financials
- Capital Goods
- Realty
Meanwhile, they reduced exposure in sectors like:
- FMCG
- Consumer Durables
- Information Technology (IT)
This selective buying has strengthened large-cap stocks, pushing key indices like the Nifty and Sensex to new record highs in 2025.
Bond Market Selling Continues Amid Narrowing Yield Gap
While equity inflows remained strong, FIIs continued to sell in the Indian bond market, a trend analysts say is likely to continue due to the narrow yield differential between Indian and US bonds.
Domestic Drivers Support Market Rally
According to Ajit Mishra, SVP – Research at Religare Broking, the recent rally was driven by a mix of:
- FII inflows (₹12,000+ crore in a single day)
- Subdued oil prices
- Progress in monsoons
- Stable macroeconomic indicators
These factors collectively boosted investor optimism and amplified liquidity, further strengthening the bullish sentiment.
India’s Economic Resilience Attracts Global Capital
India remains one of the world’s fastest-growing economies, underpinned by strong macroeconomic fundamentals and a pro-reform policy environment. According to Manoj Purohit, Partner and Leader, Financial Services Tax at BDO India, consistent reforms by regulators like SEBI have played a key role in enhancing transparency and attracting global capital.
“India’s regulatory institutions are creating an ecosystem conducive to sustained FII participation,” said Purohit.
Valuation Caution Remains Despite Bullish Momentum
Despite the bullish run, analysts warn of potential profit booking due to high market valuations. Dr. Vijayakumar noted that while liquidity is abundant, expensive valuations may act as a speed bump for further rallies.
