Will an earnings revival reel FPIs back to Indian shores?

Friday’s session saw domestic benchmarks rally sharply after US President Donald Trump announced a temporary pause on tariffs against over 70 countries, including India, until July.

Experts feel that despite the recent firesale by foreign portfolio investors (FPIs), they may return to Indian shores once the waters calm as India’s growth is expected to be resilient.

VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, expects FPIs to resume buying once macro headwinds ease. “The US-China tariff war is likely to drag both economies into a slowdown. In contrast, India is expected to grow 6 percent in FY26 due to improved earnings. That relative resilience could lure foreign capital back once clarity returns to global markets,” he added.

Vijayakumar attributes the turbulence to global market jitters following the flare-up in US-China trade tensions. "FPIs had briefly started buying in late March, but resumed selling once market volatility spiked," he said.

Foreign investors continued to offload Indian equities on Friday, marking the ninth consecutive day of selling. With this, April outflows have climbed to Rs 35,641 crore. The selling streak adds to what has been a difficult few months for FPIs, who have pulled out a staggering Rs 1.74 lakh crore since the beginning of the year.

On Friday, they net sold shares worth Rs 2,519 crore, while domestic institutional investors (DIIs) stepped in with net purchases of Rs 3,759 crore.

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Interestingly, Friday’s session saw domestic benchmarks rally sharply after US President Donald Trump temporarily paused tariffs against over 70 countries, including India, until July. The BSE Sensex jumped 1,310 points to settle at 75,157, while the Nifty surged 429 points to 22,828, driven by strong buying in banking and auto stocks.

Ajit Mishra, SVP, Technical Research, at Religare Broking, cautioned that bourses will remain sensitive in the coming week, with the US-China situation and earnings season both in focus. IT heavyweights like Wipro and Infosys, as well as private banking giants HDFC Bank and ICICI Bank, are scheduled to report their quarterly results.

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From a technical standpoint, the Nifty has rebounded after breaching its March lows and is now hovering around 22,900, its 20-day exponential moving average. A decisive close above this level could pave the way for a move towards 23,400, with resistance visible at 23,800. On the downside, 22,300 is seen as the immediate support, followed by 21,700.

Bank Nifty continues to show relative strength, as it has reclaimed key averages. As long as it holds above the 50,000 mark, the index could target 52,000 and 53,500 in the near term.

Given the heightened volatility, experts advise a cautious, hedged approach for now. However, selective buying opportunities remain, especially in the financial sector. Investors are also being encouraged to accumulate quality stocks from other sectors on dips.