Weekly Musings – FPI flows for week ended June 27, 2025

FPIS CLOSE THE WEEK WITH A SWAGGER

FPIs infused over $1 billion each on Monday and Friday, but were net sellers on other days, resulting in net FPI buying of $1.52 Billion for the week. Geopolitical risk subsided and the focus shifts to trade deals. FPI flows in debt were marginally positive this week. With an uneasy truce, FPIs are not too sure when the situation could deteriorate once again.

Dollar index (DXY) weakened further to 97.25 levels. The rupee hardened to ₹85.45/$ on weak dollar index and a current account surplus in Q4. Brent Crude fell sharply to $66.8/bbl, as peace seemed to return to the Middle East. India surprised the street with a current account surplus in Q4 and FY25 CAD at just 0.6% of GDP. Nifty VIX tapered to 12.39 levels.

MACRO FPI FLOW PICTURE UP TO JUNE 27, 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 $(8,472) Million. This comprised $(9,541) Million of net selling in equities, offset by $1,069 Million of net buying in debt. Within equities, secondary market selling was to the tune of $(12,089) Million; offset by IPO buying of $2,548 Million. It was a week dominated by IPO flows.

FPI SENTIMENTS – THE WEEK THAT WAS

For the week to June 27, 2025, FPIs were net buyers in equities worth $1,522 Million.

• Late on Friday, the RBI reported Q4 and full year current account position. India had a surplus on current account in Q4 of $13.5 billion, which cut the overall current account deficit to $23.3 Billion, or 0.6% of FY25 GDP!
• Three key factors worked favourably in the current account for India. The global unrest led to back-ending of goods imports. Services exports continued to grow at a robust pace. Thirdly, the inward remittances continued at record levels in FY25.
• Indo-US trade deal may be delayed after both nations could not agree upon the level of tariffs, opening up services and allowing GM crops from the US. There will be one more round before July 09 for a trade deal.
• US GDP contracted by -0.5% as per final estimate for Q1, sharper than early estimates. The PCE inflation came in at 2.3% for May, but core PCE inflation at 2.7% is on the higher side. It remains to be seen how the Fed reacts to the GDP contraction.
• Amidst cautious calls on gold, BOFA expects 20% upside to $4,000/oz by 2026. According to BOFA, the next trigger will not be central bank buying or safe haven buying by investors. It will be gold as a hedge against rising US fiscal deficit and dollar weakness.

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 $130 Million, $391 Million; net outflows $(1,025) Million; net inflows $705 Million, net outflows $(560) Million; net inflows of $521 Million, and $1,658 Million. The week to June 27, 2025, saw net FPI buying worth $1,522 Million.
• In last 4 rolling weeks, total net FPI inflows into equities were to the tune ₹8,916 Crore or $1,027 Million. Debt markets saw insipid buying.

In the coming week, FPI flows are likely to react to the better-than-expected current account position. Secondly, the relative peace in the Middle East and sober oil prices are key positives. Two key domestic data points will be the IIP growth for May, and the two-month update on the fiscal deficit. Of course, all eyes will be on the Indo-US trade deal.