Foreign Portfolio Investors (FPIs) have pulled out ₹53,022 crore from Indian equities in June so far, according to depository data reported by News on AIR. However, the selling pressure has moderated noticeably in the second half of the month, led by selective buying by FPIs, who remained net buyers during all four sessions last week. Rupee stability has supported renewed foreign investor interest over the past two weeks.
Equity Selloff Moderates
The ₹53,022-crore equity outflow in June represents a significant capital exodus, but the pace has slowed in recent days. FPIs turned net buyers in the last week, a reversal from the heavy selling earlier in the month. The moderation coincides with relative stability in the Indian rupee, which has encouraged foreign investors to re-enter the market after the initial selloff.
Record Debt Inflows
In contrast to equities, the Indian debt market has witnessed a record inflow in June, driven by a series of measures announced by the government and the Reserve Bank of India (RBI) earlier this month. These measures aim to attract stable long-term foreign capital, deepen the government securities market, and strengthen the country's debt market.
According to the same depository data, the debt categories have seen substantial inflows:
| Debt Category | Inflow in June (₹ crore) |
|---|---|
| Debt General Limit | 24,518 |
| Fully Accessible Route | 20,958 |
| Voluntary Retention Route | 3,518 |
| Total | 48,994 |
The combined inflow of ₹48,994 crore into these three debt categories marks a historic high for monthly debt investments by FPIs.
Policy Measures Behind the Shift
The government and RBI's earlier measures this month were designed to attract stable long-term foreign capital and enhance the depth of the government securities market. These steps have particularly boosted the Debt General Limit and Fully Accessible Route categories, which together accounted for over ₹45,000 crore of the inflows. The Voluntary Retention Route also saw a contribution of ₹3,518 crore.
For investors and corporate strategists, the divergence between equity outflows and debt inflows signals a shift in foreign investor preferences towards fixed-income instruments, likely driven by policy certainty and yield considerations in the current rate environment.
Outlook
The moderation in equity selling and the record debt inflows suggest that foreign investor sentiment towards India is stabilising, supported by policy actions and currency stability. The next milestone to watch will be the monthly FPI flow data for July and any further policy announcements from the RBI or government.
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