Weekly Musings – FPI flows for week ended July 04, 2025

FPIS CLOSE THE WEEK ON A CAUTIOUS NOTE

After infusing $1.52 Billion in the previous week, FPIs were more measured this week. They infused just $497 Million into Indian equities this week. FPIs were tad cautious due to the upcoming tariff deadline on 09-July, with no trade deal in place. One more factor that could impact FPI flows could be the recent order by SEBI on Jane Street over F&O trades.

The Dollar Index (DXY) closed the week below the 97 mark with the reciprocal tariffs and the OBBBA implementation coming up. Both have the potential to weaken the dollar. However, the USDINR was flat around ₹85.50/$. Brent Crude prices have fallen nearly $10/bbl from the recent peaks and are more reasonable at around $68/bbl. Focus shifts to Q1 results.

MACRO FPI FLOW PICTURE UP TO JULY 04, 2025

The table captures monthly FPI flows into equity and debt for last 4 calendar years.

Data Source: NSDL (Net Outflows in brackets)

Overall FPI flows for 2025 are still negative at $(6,342) Million. This comprised $(9,043) Million of net selling in equities, offset by $2,701 Million of net buying in debt. Within equities, secondary market selling was to the tune of $(12,001) Million; offset by IPO buying of $2,958 Million. While IPO flows stood out, FPIs were aggressive buyers in debt too.

FPI SENTIMENTS – THE WEEK THAT WAS

For the week to July 04, 2025, FPIs were net buyers in equities worth $497 Million.

• India IIP for May 2025 came in sharply lower at 1.23%, compared to 2.57% in April and well below the last one-year average of 4%. While mining output was almost flat, manufacturing and electricity have taken deep cuts in the last 2 months.
• The CGA also provided an update of fiscal deficit at the end of May. It may look too good at 0.8% of full year target, but that is due to the front-loading of the RBI dividend into receipts in May. Revenue and primary accounts actually reported a surplus in FY26.
• US unemployment rate came in marginally lower at 4.1% for June 2025. Even the non-farm payroll additions were comfortable at 1,47,000. However, Powell is unlikely to budge on rate cuts, unless there is full clarity on the reciprocal tariffs.
• SEBI bars Jane Street from Indian markets with heavy penalties. Jane Street allegedly made profits of over ₹36,000 crore from options trading. SEBI is of the view that the profits were made by unfairly manipulating indices, to the detriment of small investors.
• India has invited global tenders from copper majors like Codelco of Chile and BHP of Australia to set up copper refineries and processing plants in India. The idea is meet the massive domestic shortfall in copper output that India is facing to the tune of 80%.

Let us turn to the granular FPI flow story in last 4 weeks.

DAILY FPI EQUITY FLOWS FOR LAST 4 ROLLING WEEKS

Here is the last 4 rolling weeks data on FPI flows in rupee terms and in dollar terms.

Data Source: NSDL

• In previous 7 weeks, FPIs saw net inflows of $1,522 Million, $130 Million, $391 Million; net outflows $(1,025) Million; net inflows $705 Million, net outflows $(560) Million; and net inflows $521 Million. The week to July 04, 2025, saw net FPI buying of $497 Million.
• In last 4 rolling weeks, total net FPI inflows into equities were to the tune ₹21,919 Crore or $2,549 Million. Debt market buying picked up in a big way in July.

In the coming week, FPI flows are likely to react to several specific factors. The quarterly results will be closely watched by FPIs as will be the FOMC  minutes. The Indo-US trade deal and the implications of the OBBBA will also influence FPI flows. But, the one factor that will have an immediate impact on FPI flows will be the recent SEBI order against Jane Street.