Foreign Investors Inject Rs 14,167 Cr into Indian Equities in May Despite Tensions
Despite the recent military conflict between India and Pakistan, Foreign Portfolio Investors (FPIs) continued to show confidence in the Indian market, investing Rs 14,167 crore into equities in the first part of May. This positive inflow is attributed to favourable global cues and robust domestic economic fundamentals. The trend follows a net investment of Rs 4,223 crore in April, indicating sustained foreign investor interest in India's growth story.
Unpacked:
Foreign investors are drawn by India's robust domestic economic fundamentals, such as strong GDP growth and favorable policy outlook, as well as positive global cues. These factors appear to outweigh concerns about regional instability, at least in the short term, and signal continued confidence in India's long-term growth prospects.
The conflict has imposed significant economic costs on both India and Pakistan. India faces heavy military expenditures and risks to its ambitions as a global economic powerhouse, while Pakistan’s already fragile economy is further strained by defense spending and loss of revenue from trade and tourism. Both countries risk long-term developmental challenges due to diverted resources and disrupted investor trust.
Yes, there is a risk. While recent inflows suggest current investor confidence, prolonged conflict can undermine trust, disrupt trade, and create uncertainty. Historical patterns show that lasting military tensions often lead to reduced foreign investments as investors seek stable environments for their capital.
Operation Sindoor refers to India’s coordinated military operation against Pakistan in early May 2025, involving missile strikes and naval mobilization. It was a decisive action following an attack in Pahalgam and led to a rapid escalation of hostilities, ultimately resulting in a ceasefire after international mediation.