FIIs Return to India: Positive Net Value in First Week of June 2025
After a series of withdrawals, Foreign Institutional Investors (FIIs) have returned to India, recording a positive net value in the first week of June 2025. This shift is attributed to the Reserve Bank of India's (RBI) repo rate cut and SEBI's extension of the ODI issuance framework.
On the Domestic Institutional Investors (DIIs) front, they have been reaffirming their confidence in Indian indices. DIIs purchased shares worth ₹22,522.51 crore and sold shares worth ₹13,180.03 crore, yielding a positive differential of ₹9,342.48 crore, according to provisional data provided by the National Stock Exchange (NSE). So far in June 2025, FIIs have recorded net outflows of ₹4,575.59 crore, while DIIs have made net purchases amounting to ₹16,170.95 crore.
In May, FPIs invested ₹19,686 crore in Indian stocks via exchanges, the highest since September’s nearly ₹50,000 crore inflow. They also turned net buyers in April, adding ₹4,223 crore, according to depository data.
Market watchers attribute some of this sentiment to the Reserve Bank of India’s decision to reduce the repo rate, as announced by its Monetary Policy Committee, which concluded its 55th meeting on Friday. India’s central bank lowered the repo rate by 50 basis points, capping it at 5.5 per cent. This reduction is expected to provide relief in loan disbursements.
Reacting to Friday’s market sentiment, Manoj Purohit, Partner & Leader, FS Tax, Tax & Regulatory Services, BDO India, stated, “The offshore investor fraternity adopted a vigilant approach this week while investing in the Indian capital market. The central bank and the market regulator are leaving no stone unturned in facilitating foreign market participants while they view India as one of the preferred jurisdictions for long-term investment.”
SEBI also provided offshore investors with some respite in May this year. India’s market regulator extended the deadline for implementing the framework tightening the issuance of offshore derivative instruments (ODIs) by FPIs to 17 November 2025. Last year, SEBI had set 17 May as the implementation date for this regulation.
Purohit further commented on last week’s FII sentiment in light of SEBI’s ODI issuance extension, stating, “With additional time for smooth implementation, this move will undoubtedly provide much-needed liquidity and penetration to the bond market while enhancing the attractiveness of Indian fixed-income instruments to overseas investors.”
Frequently Asked Questions
What is the significance of FIIs returning to India?
The return of FIIs to India is significant as it indicates renewed confidence in the Indian market. This can lead to increased investment, higher liquidity, and potentially higher stock prices.
How did the RBI repo rate cut impact the market?
The RBI repo rate cut by 50 basis points to 5.5% is expected to provide relief in loan disbursements, making borrowing cheaper and potentially boosting economic activity and market sentiment.
What role do DIIs play in the Indian market?
DIIs, or Domestic Institutional Investors, play a crucial role in the Indian market by providing consistent and substantial investment, which helps in maintaining market stability and liquidity.
What is the ODI issuance framework by SEBI?
The ODI (Offshore Derivative Instruments) issuance framework by SEBI is a set of regulations that govern the issuance of derivative instruments by Foreign Portfolio Investors (FPIs). SEBI extended the deadline for implementing this framework to 17 November 2025.
How did SEBI's extension of the ODI issuance framework affect the market?
SEBI's extension of the ODI issuance framework deadline to 17 November 2025 provided offshore investors with additional time for smooth implementation, which is expected to enhance liquidity and the attractiveness of Indian fixed-income instruments.
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