The mood of foreign portfolio investors (FPIs) has shifted dramatically, signaling positive sentiment towards the Indian stock market. According to SEBI Chairman Tuhin Kanta Pandey, who recently returned from a conference of global market regulators under the International Organization of Securities Commissions (IOSCO), the mood among investors has been overwhelmingly positive.

SEBI Chairman’s Insight on FPI Sentiment

Tuhin Kanta Pandey shared his recent experience meeting with foreign investors in cities like Washington D.C., New York, and Boston, where he sensed strong faith in India’s economic future. His interactions with investors from around the globe emphasized their optimism about India's growth story. Pandey stated that India's financial outlook had received much attention at these meetings, particularly under the Financial Stability Engagement Group and discussions within the IMF-IOSCO track.

This shift in sentiment is particularly notable as Foreign Portfolio Investors had been net sellers in India’s stock markets for the first three months of 2025, marking a contrast to their current positive outlook. In April, FPIs have turned net buyers of Indian equities, indicating a reversal of the negative trend witnessed earlier this year.

The Reversal of FPI Selling Trend

The turnaround in FPI investment started from April 11, when investors began actively purchasing shares again. In fact, over Rs 24,000 crore has been invested by foreign investors since this date. This is a stark contrast to the first three months of 2025, during which FPIs were net sellers to the tune of Rs 78,027 crore in January and Rs 34,574 crore in February. The recent uptick has instilled optimism in the market, as it signals recovery after a long period of cautious selling.

Pandey acknowledged the previous period of FPI sell-offs but emphasized the long-term trend of foreign investment into India. Over the past five years, FPIs have injected over $58 billion into India’s markets, spanning both equity and debt sectors. Despite the dip in FPI activity in the previous months, Pandey stressed that India’s long-term economic prospects continue to attract foreign investors, and the recent reversal is a testament to their renewed confidence.

Factors Behind the FPI Sell-Offs

When asked about the causes behind the earlier FPI sell-off, Pandey pointed to multiple factors contributing to this trend. One key aspect he mentioned was the market valuation at the time, which likely prompted investors to re-evaluate their positions in Indian stocks. Additionally, there was uncertainty surrounding the new U.S. administration, which may have caused global investors to adopt a wait-and-see approach regarding foreign investments.

Another factor that Pandey highlighted was the China-India market comparison. In recent years, there has been ongoing debate about the relative strengths of China and India as emerging markets. While both countries offer significant growth potential, the volatility in China's economic landscape could have prompted investors to adjust their positions and shift some of their focus back to India, where the market sentiment was seen as more stable.

Optimism About India’s Long-Term Prospects

Despite these short-term fluctuations, the positive sentiment towards India from foreign investors is a sign of the confidence they have in the country’s future. The comments from SEBI Chairman Pandey echo the prevailing view that India's economic fundamentals remain strong, with a steady influx of foreign investments anticipated in the coming months.

Pandey’s remarks align with India’s growing importance as an investment destination in the global markets. The country’s GDP growth, demographic dividend, and increasing participation in the global economy make it an attractive proposition for FPIs, especially as global uncertainties persist.

Conclusion

In conclusion, the mood among foreign portfolio investors towards India’s stock market has significantly improved, with SEBI Chairman Tuhin Kanta Pandey highlighting that investors are enthusiastic about India’s growth story. The shift from FPI sell-offs to net buying reflects the market’s resilience and the optimism investors hold towards India’s economic future. Despite some challenges, including market valuation concerns and geopolitical factors, FPIs continue to see India as a key player in the global economic landscape, and this renewed confidence bodes well for India’s financial markets in the upcoming months.

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