Foreign portfolio investors (FPIs) remain an important part of India’s capital market ecosystem, Securities and Exchange Board of India (Sebi) Chairman Tuhin Kanta Pandey said. “They respond to global liquidity conditions, currency movements, relative valuations, and policy stances of major central banks.”
Speaking at the Kotak Investor Conference, Pandey said that FPIs’ equity assets under custody rose three-fold to about ₹71 lakh crore by end of January from ₹19 lakh crore in almost a decade. Including debt and other instruments, the figure stands around ₹78 lakh crore.
The chairman also said that the growing counterbalance from Domestic Institutional Investors (DIIs) adds strength to the market structure and makes it resilient during global risk-off phases. FIIs net sold shares worth ₹1.65 lakh crore in 2025, DIIs cushioned the fall by net investing equities worth ₹7.88 lakh crore.
Countering FPI Cyclicality
India’s Initial Public Offering (IPO) market has been particularly vibrant, Pandey said. Through 329 IPOs till January in FY26, companies raised about ₹1.8 lakh crore compared to about ₹1.7 lakh crore raised from 320 IPOs in FY25. “This reflects not just market appetite, but issuer confidence in public markets as a platform for long-term capital.”
The corporate market also saw steady expansion, Pandey said, growing at a 12% compound annual growth rate since FY15 to ₹58.2 lakh crore. The asset management industry’s assets under management grew almost seven times to ₹81 lakh crore in a decade.
Optimum Regulation
The regulator further said that it is conscious about excessive regulations leading to Type-I errors, “where genuine, compliant businesses face unintended hurdles.” On the other hand, a very light-touch regulation risks Type-II errors, missing bad actors and systemic risks.
The regulator’s focus is on building markets that are efficient in good times and resilient in volatile times, the chairperson said. Technology, including artificial intelligence, will play an increasing role in strengthening regulatory surveillance, improving risk management, enhancing transparency and deepening investor awareness, he added.