Foreign Investors Return to Indian Markets After RBI’s Surprise Rate Cut in June 2025

by Ashok

Posted on June 14, 2025

Foreign Investors Infuse ₹3,346.94 Crore in Indian Markets This Week

Foreign investors injected ₹3,346.94 crore into Indian equities this week, marking a notable return of overseas capital to domestic markets. This uptick in foreign inflows is largely attributed to the Reserve Bank of India’s (RBI) recent surprise rate cut, which has improved market sentiment and made Indian assets more attractive.

Context: June Still Sees Net Outflow

Despite this week’s positive inflow, the overall trend for June remains negative. Cumulative data up to June 9 shows that foreign institutional investors (FIIs) are still net sellers for the month, with net outflows totaling ₹1,573.01 crore. This means that, while the recent buying has provided a short-term boost, it has not yet reversed the broader trend of foreign capital exiting Indian markets in June.

Key Factors Driving Market Dynamics

• RBI Rate Cut: The RBI’s decision to cut the repo rate by 50 basis points has been a significant catalyst, making borrowing cheaper and supporting economic growth, which in turn has attracted foreign inflows.
• Improving Macroeconomic Signals: Renewed foreign interest is also being driven by improving macroeconomic indicators and a supportive monetary policy outlook.
• Domestic Institutional Support: Domestic institutional investors (DIIs) have consistently been net buyers, providing a strong support base for Indian equities even as foreign flows have been volatile.

Market Impact

• Benchmark indices have responded positively, scaling new highs in 2025, buoyed by both foreign and domestic institutional buying, especially in sectors like banking, autos, and consumption-driven stocks.
• The Nifty and Sensex both posted gains this week, snapping a two-week losing streak and reflecting improved investor sentiment.

Summary Table: Foreign Investment Trends (June 2025)

Conclusion

While foreign investors have provided a boost to Indian markets this week with an infusion of ₹3,346.94 crore, the cumulative data for June still shows a net outflow. The recent inflows are seen as a response to favorable policy moves and improving economic fundamentals, but sustained foreign participation will depend on continued positive macroeconomic signals and global risk appetite.

Ref: Foreign investors infuse ₹3,346.94 cr in Indian markets this week, but June still sees net outflow