NSDL Data Signals Resurgence in FPI Activity as Weaker Dollar Boosts Emerging Market Appeal
Foreign Portfolio Investors (FPIs) infused ₹8,500 crore into Indian equities during the shortened trading week from April 15 to April 17, 2025, according to data from the National Securities Depository Limited (NSDL). This marks a rare weekly net inflow after persistent outflows in the months preceding April, offering a glimmer of optimism for Indian capital markets amid a backdrop of global uncertainty and economic recalibration.
The Indian markets were open for only three sessions during the week due to public holidays on Monday and Friday. Yet, the equity segment registered net inflows, signaling renewed interest from overseas investors. Market analysts attribute this short-term resurgence in FPI activity to the weakening of the US dollar, which has triggered a recalibration of global capital allocations in favor of emerging economies like India.
Highlights:
FPIs invested ₹8,500 crore during April 15–17 despite a 3-day trading week
Short-term reversal in FPI trend attributed to a weaker dollar and strong rupee
Marks a pause in months-long selling by foreign investors in Indian equities
Rebound comes amid improving sentiment around emerging markets
Currency Dynamics Favor India as Dollar Weakness Shifts Capital Flows
A key factor driving the latest surge in FPI flows is the relative weakening of the US dollar, which has boosted the attractiveness of emerging market currencies like the Indian rupee. This currency revaluation not only reduces the hedging cost for foreign investors but also enhances return potential when repatriated into their home currencies.
Aashish P Sommaiyaa, Executive Director & CEO of WhiteOak Capital, explained the macroeconomic underpinnings of this trend. “The positive fallout of the USA tariff scenario and impending global slowdown is two-fold — one, it comes with a declining dollar and relative strengthening of emerging market currencies like the rupee, which makes it easier for FPIs to allocate money out of the USA into markets like India,” Sommaiyaa told ANI.
He further emphasized that the macroeconomic environment is enabling the Reserve Bank of India (RBI) to maintain accommodative monetary and credit policies. As both the US and China exhibit signs of a slowdown, domestic-oriented economies like India are emerging as attractive investment destinations due to their consumption-driven growth dynamics.
Highlights:
Dollar depreciation makes Indian assets relatively more attractive
Strengthening rupee reduces currency risk for overseas investors
RBI may maintain easy monetary stance amid lower global inflation
Slowing US and Chinese growth pushes FPIs toward domestic-focused markets like India
Broader April and 2025 Trends Remain in Negative Territory
While the latest weekly data points to a revival in foreign investor interest, the broader trend for April and the calendar year 2025 remains starkly negative. So far this month, FPIs have pulled out a net ₹23,103 crore from Indian equities, continuing the pattern of persistent outflows seen in recent months. For the year 2025, total net outflows from equities stand at ₹1,39,677 crore, underscoring the volatility and caution in foreign investment flows.
This divergence between short-term inflows and long-term outflows reflects the precarious nature of global investor sentiment amid geopolitical instability, inflationary concerns, and diverging central bank policy stances. Market participants are expected to closely monitor upcoming US Federal Reserve decisions, macroeconomic indicators, and geopolitical events to gauge the sustainability of the recent reversal in foreign flows.
Highlights:
Net FPI outflows in April remain at ₹23,103 crore despite this week’s inflow
Year-to-date (2025) equity outflows total ₹1,39,677 crore
Global uncertainties continue to cloud long-term FPI sentiment
Future inflows hinge on stability in Fed policy and global growth outlook
Cautious Optimism as Capital Reallocates
The ₹8,500 crore inflow during a truncated week has helped Indian equity benchmarks close positively, but experts remain cautious. The interplay of global monetary policies, currency movements, and geopolitical risks will be instrumental in shaping FPI behavior in the coming quarters. Any sustained trend of inflows will depend on consistent signals from central banks and global growth indicators that validate India’s position as a stable investment haven.
While the short-term positivity is encouraging for domestic market momentum, sustained FPI engagement will likely require continued macroeconomic reforms, political stability, and resilient corporate earnings to balance external headwinds.
Highlights:
Weekly inflow provides temporary support to Indian equities
Market watchers remain alert to global macroeconomic signals
Sustained FPI return depends on reforms, earnings growth, and geopolitical calm
