The Indian stock market has experienced a notable recovery in March 2025. The Nifty 50 index has risen by 3.2% this month, marking a significant rebound after a five-month losing streak. Similarly, the BSE Sensex has shown positive momentum, opening over 400 points higher on March 20, 2025, with the Nifty50 crossing the 23,000 mark.
Foreign Institutional Investors (FIIs) have played a crucial role in this resurgence. After 17 consecutive days of net selling, FIIs purchased ₹1,463 crore worth of Indian equities in March, signaling renewed confidence in the market. Domestic Institutional Investors (DIIs) have also contributed, investing ₹2,028 crore during the same period.
Despite these positive developments, challenges persist. In the first half of March, foreign investors continued selling Indian stocks, particularly in the information technology (IT) and consumer goods sectors, driven by concerns about the U.S. and Indian economies. From October to March, FPIs sold $28 billion worth of shares, causing the Nifty 50 index to fall 13% from its peak in late September 2024.
The Indian rupee has also shown signs of strengthening, influenced by a decline in U.S. Treasury yields after the Federal Reserve decided to slow down its balance sheet reduction and signaled plans to cut rates twice within the year. The rupee has experienced a six-session winning streak, appreciating over 1% during this period.
In summary, while the Indian stock market has made a commendable recovery in March 2025, the return of foreign funds remains tentative. The mixed signals from FIIs and ongoing economic concerns suggest that sustained foreign investment will depend on continued market stability and positive economic indicators.