During the first week of May 2025, Foreign Institutional Investors (FIIs) demonstrated a remarkable resurgence in their interest in the Indian stock market, marking a notable reversal from the outflows witnessed in the preceding months. Between May 1 and May 9, FIIs injected approximately ₹14,167 crore into Indian equities, reflecting renewed optimism despite the backdrop of ongoing geopolitical tensions between India and Pakistan. This influx of foreign capital was part of a larger trend, with FIIs contributing a total of ₹23,778 crore by mid-May, building on a net purchase of ₹4,243 crore recorded in April.

Several key factors underpin this renewed enthusiasm among foreign investors. Analysts point to easing geopolitical concerns and improvements in global trade relations as important contributors, alongside India’s strong economic fundamentals and growth outlook. Expectations of further interest rate cuts by the Reserve Bank of India, coupled with a controlled inflation environment, have also played a significant role in fostering a more favorable investment climate.

The momentum gained during the first week extended into the second week of May, highlighted by FIIs making their second-largest single-day purchase of the year on May 16, when they acquired equities worth ₹8,831 crore. This persistent buying activity underscores the growing confidence among foreign investors in India’s stock market resilience and its long-term potential for robust growth.

In summary, the first week of May 2025 marked a significant positive shift in Foreign Institutional Investor sentiment towards Indian equities. This was driven by a combination of supportive domestic economic conditions, encouraging global trade dynamics, and policy expectations, reinforcing India’s position as an attractive destination for foreign capital inflows and investment opportunities.