Published on: June 14, 2025 12:51 pm
📊 FPI Investment Trend in June 2025: A Mixed Bag for Indian Markets
Foreign Portfolio Investors (FPIs) infused ₹3,346.94 crore into Indian equity markets during the second week of June 2025. Despite this inflow, the overall investment for the month continues to remain in the negative territory. The latest developments reflect the tug-of-war between improving domestic fundamentals and persistent global volatility.
🏦 RBI Rate Cut Sparks Fresh Optimism
RBI’s Monetary Policy Moves Favor Equities
The Reserve Bank of India surprised the market by slashing the repo rate by 50 basis points on June 6, bringing it down to 5.50%, the lowest in two years. This unexpected move was aimed at boosting liquidity and consumption amid slowing GDP growth.
“We believe the rate cut will provide a temporary cushion for equities, especially in banking and infrastructure sectors,” said Rajeev Mehta, Senior Analyst at Motilal Oswal.
Weekly Inflows: A Result of Policy Shift
Following the RBI’s accommodative stance, FPIs turned net buyers this week, bringing in ₹3,346.94 crore. However, the trend did not hold till Friday, when foreign investors pulled out ₹3,275.76 crore in a single day, largely due to renewed geopolitical tensions between Israel and Iran.
📉 Despite Weekly Gains, June Sees Net Outflows
FPI Outflows Dominated First Week of June
According to NSDL data, the first week of June saw outflows of ₹8,749 crore, led by fears over U.S. interest rate hikes, rising bond yields, and profit-booking after May’s rally.
Monthly Summary (As of June 14, 2025)
| Period | Net FPI Inflow/Outflow (₹ Crore) |
|---|---|
| First Week (June 1–7) | –8,749 |
| Second Week (June 8–14) | +3,346.94 |
| Net Total (June) | –5,402 |
Factors Driving Outflows
- U.S. Fed tightening cycle and inflation data
- Crude oil volatility due to Middle East unrest
- Dollar index spike, reducing the appeal of emerging markets
- Profit booking in high-performing sectors like IT and FMCG
🌍 Global Uncertainty Continues to Weigh on Indian Equities
Geopolitical Headwinds
The Israeli military strike on Iran in early June 2025 significantly impacted global investor sentiment. Fears of prolonged conflict in the Middle East led to increased volatility across Asian markets.
U.S. Yield Curve and Dollar Strength
Rising U.S. 10-year Treasury yields, now hovering around 4.5%, have made American assets more attractive to global investors, pulling money away from emerging markets like India.
🔍 Sector-Wise FPI Activity in June 2025
📈 Sectors Seeing Inflows:
- Banking – Strong earnings and rate-cut benefits
- Infrastructure – Benefiting from continued government capital expenditure
- Green Energy – Interest due to long-term FDI reforms
📉 Sectors Seeing Outflows:
- IT – Margin pressures and global tech slowdown
- Pharma – Regulatory issues in U.S. markets
- FMCG – Impact of inflation on rural demand
🧮 Comparison with Previous Months
| Month | FPI Net Flows (₹ Crore) |
|---|---|
| March | –2,356 |
| April | +4,223 |
| May | +19,860 |
| June* | –5,402 |
*As of June 14, 2025
This contrast underlines that despite a strong recovery in April and May, June has reversed the trend.
🗣️ Expert Opinions
Market Strategist Comment:
“While the weekly FPI inflow is encouraging, the net outflow for the month reflects global headwinds. We expect sentiment to remain cautious ahead of the U.S. Fed meeting later this month,” said Kavita Das, Chief Economist, Edelweiss.
Government Perspective:
The Indian finance ministry emphasized that long-term FDI and sovereign wealth flows remain robust, and short-term FPI movement should be seen in the context of global risk-off events.
🧭 What Should Investors Watch For?
Upcoming Triggers:
- U.S. Fed Meeting (June 19–20)
- India’s June inflation data
- Monsoon forecast revisions
- Corporate Q1 earnings season
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📝 Conclusion
Despite a promising week for the Indian equity markets with ₹3,346 crore in FPI inflows, the broader picture remains one of caution. June 2025 is still a net negative month for FPIs due to geopolitical tensions and global economic uncertainty. Investors and policymakers alike will need to stay alert to shifting global winds while capitalizing on India’s long-term fundamentals.