2026 so far: Outflows stand at \u20b91.86 lakh crore<\/li>\n<\/ul>\nSo while this week\u2019s inflow looks strong in isolation, it is small compared to the scale of recent selling.<\/p>\n
Dr. V K Vijayakumar noted, \u201cThe buying seen in the last few sessions is marginal compared to the overall selling trend.\u201d<\/em><\/p>\nIn other words, this is not yet a reversal \u2014 it\u2019s a pause in a larger outflow cycle.<\/p>\n
Rupee Stability Triggers Entry \u2014 Currency Now Drives Equity Flows<\/h2>\n
The most important trigger behind this shift is not equities \u2014 it\u2019s the currency.<\/p>\n
The Reserve Bank of India\u2019s actions to curb speculative pressure helped stabilise the rupee, reversing its earlier depreciation trend.<\/p>\n
This matters because for FPIs:<\/p>\n
\n- Currency movement directly affects returns<\/li>\n
- Volatility increases hedging costs<\/li>\n
- Stability improves short-term confidence<\/li>\n<\/ul>\n
Vijayakumar highlighted this clearly, saying, \u201cIn anticipation of rupee stability, FPIs turned buyers in the last three sessions.\u201d<\/em><\/p>\nThis reinforces a critical point:
\ud83d\udc49 Foreign flows are currently currency-driven, not valuation-driven.<\/p>\n
Global Cues, Not Domestic Factors, Are Driving the Narrative<\/h2>\n
The second major trigger came from outside India.<\/p>\n
Easing geopolitical tensions in West Asia \u2014 particularly ceasefire signals \u2014 helped:<\/p>\n
\n- Cool crude oil prices<\/li>\n
- Reduce inflation fears<\/li>\n
- Improve global risk appetite<\/li>\n<\/ul>\n
Himanshu Srivastava noted, \u201cThe easing of geopolitical tensions supported FPI sentiment by reducing inflation concerns.\u201d<\/em><\/p>\nThis explains the timing of the inflows \u2014 they coincided with global relief, not domestic improvement.<\/p>\n
Debt Flows Tell a Different Story: Caution Still Intact<\/h2>\n
If equity flows suggest optimism, debt flows tell a more cautious story.<\/p>\n
FPIs continued to:<\/p>\n
\n- Sell in Debt-General Limit<\/li>\n
- Sell in Debt-VRR<\/li>\n<\/ul>\n
Only selective buying was seen in Debt-FAR segments.<\/p>\n
This divergence indicates that while investors are willing to take short-term equity exposure, they are still cautious about:<\/p>\n