May records highest FPI inflows of 2025 at ₹19,860 crore despite Friday selloff

Foreign investment in Indian markets reached a record high in May 2025, with net foreign portfolio investment (FPI) inflows standing at ₹19,860 crore, making it the best-performing month so far this year in terms of foreign investment, according to data released by the National Securities Depository Ltd (NSDL).

During the week from May 26 to May 30, foreign investors continued their buying spree with a net inflow of ₹6,024.77 crore. The data showed that all trading days of the week witnessed positive inflows, except Friday, when there was a net outflow of ₹1,758.23 crore.

Despite this strong monthly performance, the overall FPI investment in 2025 remains in negative territory. From January to May, the net outflows stand at ₹92,491 crore. However, the sharp inflows seen in May are being viewed as a sign of a potential turnaround in foreign investor sentiment.

The previous months painted a contrasting picture with FPIs selling stocks worth ₹3,973 crore in March. In January and February, they had sold equities worth ₹78,027 crore and ₹34,574 crore, respectively, contributing to the year’s overall negative tally.

The recent rebound in FPI activity has been attributed to the weakness in the US dollar and the improving outlook of the Indian stock market. India’s strong economic fundamentals continue to attract global investors, even though FPI movements remain sensitive to global factors and external headwinds.

Himanshu Srivastava, Associate Director – Manager Research at Morningstar Investment, noted the month’s dynamic pattern. “In May 2025, Foreign Institutional Investors exhibited a dynamic investment pattern in the Indian equity markets. The month commenced with robust inflows, driven by favourable global economic indicators and strong domestic fundamentals,” he said.

“However, mid-May witnessed significant outflows due to geopolitical tensions and global uncertainties. By the month’s end, FIIs had resumed buying, reflecting them regaining optimism on the Indian markets,” Srivastava added.

On Friday, the last trading session of May, the Indian stock market ended slightly lower tracking mixed global cues. The Sensex closed 182 points, or 0.22 per cent, lower at 81,451.01, while the Nifty 50 settled at 24,750.70, down 83 points, or 0.33 per cent.

The weekly data revealed varying investment patterns across different days. Monday saw net outflows of ₹697 crore, but Tuesday through Thursday recorded consistent inflows of ₹974 crore, ₹272 crore and ₹3,165 crore respectively, before Friday’s reversal.

Several global and domestic factors influenced the May performance. Globally, easing US inflation and expectations of interest rate cuts by the Federal Reserve made emerging markets like India more attractive. Domestically, India’s strong GDP growth, robust corporate earnings and policy reforms enhanced investor confidence.

While the year began on a cautious note, the positive momentum in May could mark the beginning of a trend reversal if global conditions remain stable. The substantial monthly inflows demonstrate renewed foreign confidence in Indian markets despite ongoing global uncertainties.

Market participants will closely monitor upcoming economic data releases and global monetary policy developments for cues on whether the May momentum can sustain through the remaining months of 2025.

Published on May 31, 2025