Explained: Why foreign portfolio investors are buying Indian financial stocks

India Today

07-05-2025

Foreign portfolio investors (FPIs) turned strong buyers of Indian financial stocks in April, marking a sharp reversal in sentiment after months of caution.
Data from the National Securities Depository shows FPIs bought Rs 18,409 crore ($2.18 billion) worth of shares in the sector last month, propelling the Nifty Financial Services index to a 4.1% gain.
The second half of April alone saw $2.71 billion in FPI inflows—the highest-ever for a fortnight, and the third-highest monthly inflow on record for the financial sector. This influx helped foreign investors post their first net buying month in 2025, sending the benchmark Nifty 50 index up 3.5%.
Bajaj Broking attributed the buying spree to easing global trade tensions, hopes of a US–India trade agreement, and attractive valuations in Indian equities. The US government's move to pause reciprocal tariffs on April 9 and signals of an imminent bilateral trade deal also lifted sentiment.
Strong quarterly results from India's top private lenders—HDFC Bank and ICICI Bank—further boosted FPI interest, according to analysts. The financial sector's robust earnings stood in contrast to the information technology space, which saw outflows of $1.8 billion as global demand concerns deepened.
Telecom and consumer stocks also attracted foreign interest in April, but most other sectors witnessed outflows.
Ambit Capital warned that policy uncertainty due to US tariffs, combined with slowing growth in the US, UK, and EU, could weigh on IT margins and demand through FY2026.