Will FIIs Resume Equity Purchases in India as Bulls Roar?
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Synopsis
The recent ceasefire between India and Pakistan could signal a substantial market rally, prompting foreign institutional investors (FIIs) to re-enter the Indian equity market. Analysts are optimistic about a resurgence in investment activity as macroeconomic indicators show promise.
Key Takeaways
- Ceasefire between India and Pakistan may boost market stability.
- FIIs are likely to return to the Indian equity market.
- Large-cap stocks such as ICICI Bank and HDFC Bank are popular among FIIs.
- Domestic macroeconomic indicators show positive trends.
- Pharma stocks may face challenges due to US drug price announcements.
Mumbai, May 12 (NationPress) The recent ceasefire between India and Pakistan has set the stage for a significant market rally. As a result, foreign institutional investors (FIIs) are anticipated to restart their equity investments in India, according to analysts on Monday.
The Sensex and Nifty indices experienced a surge exceeding 2.7 percent during morning trading.
Market analysts suggest that the primary force behind this rally will be the ongoing FII purchases, which have continued for 16 consecutive days, with the exception of last Friday when tensions escalated.
“Positive domestic macroeconomic factors, including expectations of robust GDP growth, a rebound in earnings for FY26, and falling inflation and interest rates, are favorable for the market's rally continuation,” stated Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited.
FIIs are showing a preference for large-cap stocks such as ICICI Bank, HDFC Bank, Bajaj Finance, L&T, Bharti, Ultratech, M&M, and Eicher. Additionally, mid-cap IT and digital firms are sectors to monitor closely.
However, pharmaceutical stocks might face short-term pressure following US President Donald Trump's recent announcement regarding drug price reductions in the United States.
“There are speculations about an impending trade deal between the US and China, although details remain unclear. Should a deal be established, it could positively impact the global economy,” added Vijayakumar.
The recent trend in foreign portfolio investment has been characterized by consistent FII buying. They purchased equities through the exchanges for 16 consecutive trading days up to May 8, amounting to a total of ₹48,533 crore.
“On May 9, they sold ₹3,798 crore due to the escalation of the India-Pakistan conflict. With the declaration of a ceasefire, it is expected that FIIs will once again resume their equity purchases in India,” analysts commented.
It is noteworthy that FIIs were net sellers in India during the first quarter of this year, with significant selling starting in January (₹78,027 crore) when the dollar index peaked at 111 in mid-January.
Following that, the selling pressure diminished, and FIIs transitioned to buyers in April, with a total purchase figure of ₹4,243 crore.
Point of View
It's crucial to highlight that the recent ceasefire between India and Pakistan presents an opportunity for market recovery. It’s imperative for investors to stay informed about the evolving economic landscape and the potential for foreign institutional investments to stabilize and invigorate the market.
NationPress
25/07/2025
Frequently Asked Questions
What triggered the potential resurgence of FIIs in India?
The ceasefire between India and Pakistan has created a more stable market environment, encouraging foreign institutional investors to resume their equity purchases.
Which sectors are expected to attract FII investments?
FIIs are likely to focus on large-cap stocks such as ICICI Bank, HDFC Bank, and Bajaj Finance, along with mid-cap IT and digital stocks.
What are the current market trends regarding FIIs?
After being net sellers in the first quarter, FIIs have shown a resurgence in buying, with substantial purchases over the past weeks.
How do macroeconomic factors influence FII investments?
Factors like anticipated GDP growth, improving earnings, and declining inflation create a favorable environment for FIIs to invest.
What impact could a US-China trade deal have?
A potential trade deal between the US and China could bolster global economic conditions, positively affecting investor sentiment.
