The FII buying binge continues. In the past 7 trading sessions or last 10 days Foreign institutional investors have bought equities worth Rs 29,510 crore. This striking change in approach is also indicative of the overall global scenario at the moment. The US markets have rallied significantly in the past few sessions and the dollar at the same time has been stuck in a range. Experts point out that the improving economic fundamentals coupled with growing optimism about earnings improvement in FY26 is also adding to the buying momentum.
What changed for India?
The allocation of funds by FIIs is not just country specific but dependent on a host of global and local factors. They have been consistent net sellers in Indian markets since October 2024. March was the first month after 5months, when they turned net buyers, albeit the net inflows were only Rs 2000 crore. The question then is what changed?
Siddhartha Khemka, head – research, Wealth Management, Motilal Oswal Financial Services outlined how the “global scenario post the reciprocal tariff is in some way favouring India not only from the domestic growth perspective but also from the global perspective. India comes across as a potentially preferred partner given the relatively lower tariff compared to many other Asian peers. This definitely puts India in a better spot to navigate the global uncertainty.”
Moreover in the last few months we have seen a healthy correction, FIIs have already sold a lot. Valuations are becoming relatively more comfortable and earnings, which was a concern so far, that is now bottoming out.
Khemka added that “Q4 is likely to be the last quarter that’s clocked such soft numbers. From here on the commentary indicates that domestic consumption is picking up, monsoon is likely to be good and as a result, monsoon related sectors are set to do well. Another key factor that is supporting markets is that RBI has been injecting a lot of liquidity into the system. This is very positive for banks and financials. These stocks comprise almost 30% of Index weight. These are mostly domestic-focussed companies and immune to global volatility.”
Global recession worries, India set to outperform
The IMF has cut the growth forecast for India to 6.2 percent on tariff uncertainty. Despite the moderation. India is projected to remain one of the fastest-growing economy for 2025 and 2026, outpacing many of its global counterparts.
In contrast, the IMF projects global economic growth to be much lower, at 2.8% in 2025 and 3% in 2026, highlighting India’s outperformance.
Khemka pointed out that this is a key factor that works in India’s favour, “In the current global environment, despite the growth forecast cut by IMF, India still shows potential to deliver 6% plus growth- one of the highest amidst a developed and developing economy. The worst os already priced in by India. I expect rhetoric around tariffs to calm down and also come down and that augurs well for India.”
All eyes are now on the final figures for April. Can the buying momentum sustain even as Indian markets end the week in green.