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FPIs Pour Inflows in June, Pull Back in Early July: What’s Driving the Volatility?
Market News - June 16, 2025

Foreign Investors Pump Over ₹3,300 Crore into Indian Equities Amid RBI Rate Cut

Foreign Investors Pump Over ₹3,300 Crore into Indian Equities Amid RBI Rate Cut

Optimism grows as RBI’s surprise rate cut boosts investor sentiment, but June’s overall FPI trend still shows a net outflow

Foreign Investments Surge on Policy Boost

During the prior week, India’s equity markets witnessed a strong influx of global funds, with foreign portfolio investors injecting ₹3,346.94 crore into stocks. This sudden uptick in investments came in the wake of the Reserve Bank of India’s unexpected decision to slash interest rates—injecting fresh optimism across the markets.

According to figures released by the National Securities Depository Limited (NSDL), foreign portfolio investors (FPIs) turned bullish on Indian stocks, Motivated by the Reserve Bank of India’s recent policy direction focused on boosting economic momentum by making credit more affordable.

RBI’s Surprise Move Spurs Investor Confidence

In its June review, the Monetary Policy Committee (MPC) surprised the markets by announcing an unanticipated 50 basis point cut in the repo rate, bringing it down to 5.5%. This aggressive rate reduction signaled a dovish outlook and was seen as a move to stimulate economic activity and liquidity.

This development boosted investor confidence, both domestic and international, as it implied improved profitability for Indian corporates and a supportive environment for capital markets. The policy shift not only influenced sentiment positively but also provided FPIs a reason to increase exposure to Indian equities.

June’s Net Investment Still in the Red

Although last week recorded promising capital inflows, the cumulative foreign portfolio investment in equities for June continues to reflect a net outflow. According to data released by the NSDL, foreign portfolio investors have withdrawn a total of ₹5,402 crore from Indian equities since the beginning of this month.

The substantial withdrawal of ₹3,275.76 crore on Friday—the final trading day of the week—dented the net weekly gains. This outflow trimmed the cumulative investment for the week, offsetting the earlier optimism and reflecting cautious investor behavior ahead of global economic events and domestic earnings data.

Volatility Persists Despite May’s Strong Performance

May had painted a different picture altogether. May stood out as the peak month for overseas portfolio activity in 2025, recording a remarkable ₹19,860 crore in net capital inflows—the highest so far this year. This remarkable performance was attributed to favorable global cues, strong earnings by Indian companies, and steady macroeconomic indicators.

However, investor activity in the first quarter of the calendar year reflected a more volatile trend. In March, overseas investors pulled out ₹3,973 crore from Indian equities, adding to the substantial capital flight seen in the first two months of the year, when January and February witnessed hefty withdrawals of ₹78,027 crore and ₹34,574 crore respectively—underscoring a marked decline in foreign investment during the initial quarter.

The stark fluctuations in capital flow highlight the global nature of investor sentiment, influenced by factors ranging from U.S. Federal Reserve decisions and geopolitical tensions to local inflation numbers and policy measures.

Monetary Easing and Market Response

The RBI’s latest policy action is a part of its broader monetary easing strategy aimed at balancing inflation control with the need to accelerate growth. With inflation appearing to be on a moderate trajectory and industrial growth indicators needing support, the central bank’s move was well-received in most financial circles.

The positive response from foreign investors in the immediate aftermath of the rate cut reinforces the close linkage between monetary policy and equity market performance. Lower interest rates generally improve corporate profitability, reduce cost of capital, and boost consumption—all of which act as catalysts for higher stock valuations.

What Lies Ahead for Foreign Capital?

While the recent rate cut has ignited short-term optimism, the broader picture for foreign investment remains mixed. FPIs continue to assess risks around global recessionary trends, volatile commodity prices, and central bank actions in developed economies.

Moreover, the net outflows in June suggest that investor caution hasn’t entirely subsided. While some funds are re-entering the Indian market, others are adopting a wait-and-watch approach, looking for more clarity on macroeconomic stability and long-term growth projections.

In the coming weeks, market watchers expect foreign investment activity to remain influenced by domestic earnings releases, upcoming monsoon forecasts, and any hints from the RBI regarding future rate actions.

Final Thoughts

Last week’s inflow of ₹3,346.94 crore from FPIs into Indian equities highlights the renewed investor confidence following the Reserve Bank of India’s decision to reduce the repo rate. While this move temporarily reversed the bearish trend seen in the month of June, overall foreign portfolio investment remains in negative territory for the month so far.

Despite the recent boost, the volatility in foreign fund movements suggests that market sentiment remains fragile. While May saw robust FPI participation, the outflows earlier this year—and now again in June—underline the importance of stable macroeconomic signals and continued policy support.

Looking forward, sustained FPI interest will depend on how the Indian economy performs in the face of global headwinds and whether the RBI’s accommodative stance yields long-term benefits for the corporate sector.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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The image added is for representation purposes only

Kellton Tech Unveils Stock Split, ₹69.3 Crore Fundraise to Boost Growth

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Banking - June 9, 2025

RBI Rate Cut Spurs Banks to Slash Lending Rates, Boosting Borrowers

RBI Rate Cut Spurs Banks to Slash Lending Rates, Boosting Borrowers

Following RBI’s surprise 50 bps rate cut and CRR reduction, Bank of Baroda and HDFC Bank lower lending rates, easing loan costs for customers.

RBI’s Bold Monetary Moves to Stimulate Growth

The Reserve Bank of India unexpectedly slashed its primary repo rate by 50 basis points on Friday, lowering it to 5.5%—a sharper drop than financial markets had foreseen. This marked the third consecutive rate cut in 2025, as the central bank pursues measures to revive economic growth amid persistent challenges. In addition to lowering the interest rate, the RBI unexpectedly cut the Cash Reserve Ratio by one percentage point, bringing it down to 3%, catching markets off guard. This move is designed to inject an additional ₹2.5 lakh crore into the banking system, thereby increasing the funds available for lending.

The RBI’s Monetary Policy Committee (MPC), chaired by Governor Sanjay Malhotra and comprising three external members, voted 5-1 in favor of these changes, reflecting broad consensus on the need for monetary easing. These measures collectively aim to enhance liquidity, lower borrowing costs, and ultimately support demand across sectors.

Bank of Baroda Quickly Implements Substantial Reduction in Lending Charges

This reduction in its Repo Linked Lending Rate (RLLR) became effective from June 7, aligning fully with the RBI’s policy adjustment. The updated Repo Linked Lending Rate (RLLR) has been adjusted to 8.15%, clearly mirroring the central bank’s rate reduction and transferring the benefit to borrowers.

BoB’s move is expected to bring tangible relief to customers with loans tied to the repo rate, including home loans, vehicle financing, and other credit facilities. By lowering the interest burden, the bank is helping boost consumer spending and business investments—key drivers for economic recovery.

HDFC Bank Lowers MCLR, Offering Relief to Loan Customers

At the same time, HDFC Bank, a prominent private sector institution, declared a 10 basis point decrease in its MCLR across multiple loan durations, with the new rates taking effect from June 7. Borrowers with loans tied to the MCLR, such as numerous home and personal loans, stand to gain from this reduction.

The overnight and one-month MCLR rates have been lowered from 9.00% to 8.90%. The MCLR for a three-month tenure has been revised to 8.95%, marking a decline from the previous rate of 9.05%. Similarly, the six-month and one-year rates have been trimmed to 9.05%, representing a 10 bps reduction. Interest rates for loans with durations of two and three years have been revised downward, decreasing from 9.20% to 9.10%.

These adjustments signal HDFC Bank’s commitment to easing borrowing costs in line with RBI’s accommodative stance. By offering slightly reduced interest rates, the bank aims to stimulate loan demand and support growth for retail and corporate clients alike.

The Broader Economic Significance of RBI’s Rate Cut

The RBI’s bold move to loosen monetary policy highlights its growing apprehension about decelerating economic momentum, driven by global instability, geopolitical strife, and trade-related disturbances weighing on India’s financial prospects. By reducing the repo rate and CRR, the central bank intends to bolster liquidity, encourage lending, and lower financing costs for businesses and consumers.

The injection of ₹2.5 lakh crore liquidity through CRR reduction is a powerful tool to enhance banks’ capacity to extend credit, particularly vital for sectors like manufacturing, infrastructure, and real estate, which depend heavily on borrowing.

This shift in monetary stance builds upon previous rate reductions earlier in the year—a 25 basis point cut introduced in February, marking the first easing since May 2020, followed by an additional 25 basis point decrease in April. Together, these three consecutive cuts total a 100 bps easing in 2025, marking a clear shift toward supporting economic revival.

Impact on Borrowers and Market Expectations

Borrowers stand to gain significantly from these rate reductions. Lower lending rates can reduce monthly EMI burdens for loan holders and potentially encourage new borrowing for home purchases, vehicle financing, business expansion, and other needs.

Additionally, the improved liquidity scenario is likely to enhance credit availability and reduce borrowing costs for small and medium enterprises, which are crucial engines for employment and economic activity.

The market has responded positively to the RBI’s measures, with benchmark equity indices witnessing gains, reflecting optimism about sustained growth and easing financial conditions.

Final Thoughts

The Reserve Bank of India’s surprise 50 basis point rate cut and 100 basis point CRR reduction constitute a strong policy thrust to revive economic momentum. Banks like Bank of Baroda and HDFC Bank have quickly translated these policy changes into lower lending rates, directly benefiting borrowers and stimulating credit demand.

BoB’s full pass-through of the repo rate cut to its lending rates and HDFC Bank’s across-the-board MCLR reductions underscore the banking sector’s readiness to support economic recovery through easier financing.

While challenges remain on the global front, the RBI’s proactive approach, combined with responsive banking institutions, creates a more conducive environment for growth, consumption, and investment in India’s economy.

This policy easing, alongside improved liquidity, is expected to accelerate credit flows and bolster confidence among businesses and consumers alike, setting a positive tone for the coming months.

 

 

 

 

 

 

 

 

 

 

 

 

 

The image added is for representation purposes only

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Market News - June 9, 2025

Market Set to Surge After RBI's Policy Move

Market Set to Surge After RBI’s Policy Move

A spike in open interest at Nifty’s 25000 weekly put suggests market participants are betting big on further upside following the RBI’s recent rate move.

Summary:
Market sentiment has shifted notably to a more optimistic outlook after the RBI’s recent policy decision, as evidenced by a significant increase in open interest at Nifty’s 25000 weekly put strike according to derivatives data. This indicates traders are gearing up for a sustained market rally, expecting upward momentum to continue as macroeconomic indicators improve and liquidity remains ample. The action is being interpreted as a green light for further equity upside in the near term.

RBI’s Bold Move Triggers Fresh Market Optimism
The Indian equity market appears primed for a fresh leg of the rally, riding high on the positive momentum unleashed by the Reserve Bank of India’s recent monetary policy decision. After the surprising 50 basis point reduction in the repo rate to 5.5%, investor morale has noticeably risen, fueling bullish expectations across various sectors.
While analysts had anticipated a more moderate rate cut, the RBI’s aggressive stance has been widely interpreted as a proactive measure to support economic growth, tame inflationary expectations, and ease liquidity constraints. The outcome? An energized stock market and a notable repositioning in the derivatives segment indicate expectations of further gains.

Derivatives Market Buzz: All Eyes on the 25000 Put
One of the strongest indicators of rising bullishness comes from the sharp jump in open interest at the Nifty 50’s weekly 25000 strike put option, expiring on Thursday. This move suggests traders are hedging less and instead positioning to benefit from a continuing uptrend.
A surge in open interest (OI) in put options—intense out-of-the-money ones like the 25000 strike—can often be interpreted in two ways: as either a protective hedge or a confident bet that the market is likely to remain significantly above that level. In this case, the context points squarely to the latter. Traders appear to be writing puts (i.e., selling them) at this level, confident that the Nifty will not breach 25000 and expecting premiums to decay as the index climbs higher.
The India VIX, a gauge of expected volatility, has also declined in recent sessions, further supporting the case for a steady uptrend in the short term.

Macro Factors Supporting the Rally
1. Easing Interest Rate Cycle:
The recent rate cut by the RBI marks a total reduction of 100 basis points in this current cycle of easing. Lower borrowing costs are expected to boost credit demand, consumption, and capex—especially in rate-sensitive sectors like auto, real estate, banking, and consumer durables.
2. Benign Inflation Outlook:
Despite global commodity price volatility, India’s CPI inflation has remained within the RBI’s comfort zone. With the central bank now adopting a more neutral stance, inflation appears manageable, giving more room for policy flexibility if required.
3. Strong Corporate Earnings:
Recent quarterly results from India Inc. have exceeded expectations, especially in IT, banking, and capital goods. With robust topline growth and improving operating margins, investor confidence in the medium-term earnings trajectory remains firm.
4. Global Liquidity Tailwinds:
With central banks globally turning dovish, global liquidity continues to favour emerging markets. India, with its stable macroeconomic fundamentals and political stability, is seen as a preferred destination for Foreign Institutional Investors (FIIs).

Technical Indicators Turn Positive
Technical charts also support the bullish narrative. The Nifty has decisively breached key resistance levels and is now trading above all critical moving averages—20-DMA, 50-DMA, and 200-DMA—indicating strength across timeframes. Market breadth has improved significantly, with more stocks advancing than declining.
Momentum oscillators like RSI (Relative Strength Index) and MACD (Moving Average Convergence Divergence) show bullish crossovers, reinforcing the uptrend. The immediate resistance for Nifty lies near the 23,500 zone, while strong support is now placed around 22,850–23,000 levels.

Sectoral Trends: Who Benefits the Most?
Banking & Financials: Rate-sensitive stocks are expected to benefit from the RBI’s decision. PSU banks, in particular, have seen renewed buying interest in improving asset quality and better provisioning buffers.
Real Estate: Lower interest rates will boost housing demand, especially in affordable and mid-income segments. Real estate stocks rallied sharply after the policy announcement.
Auto & NBFCs: Easing auto loan rates and providing better affordability are likely to support demand in the automobile sector. NBFCs also stand to benefit from the cheaper cost of funds.
Infrastructure & Capital Goods: Government capex and monetary support should revive infrastructure spending, pushing up demand for construction and capital equipment companies.

Retail Participation Rises
Retail investors have also been actively participating in the current uptrend, as indicated by increasing trading volumes in small- and mid-cap stocks. Direct retail ownership in equities is at record levels, supported by robust SIP inflows, and this cohort is expected to drive the next phase of the rally.

What Lies Ahead?
While the mood is buoyant, analysts caution against complacency. Global factors such as U.S. Fed commentary, crude oil prices, and geopolitical tensions could create short-term volatility. Nonetheless, India’s relative insulation from global turmoil, along with proactive policymaking, makes it a strong candidate for sustained outperformance.
The upcoming earnings season and inflation data will be crucial in determining the longevity of the rally. However, the current positioning by traders, especially the put writing at 25000, suggests that markets are likely to trend higher in the short term unless hit by a major external shock.

Conclusion
The Indian stock market appears to be entering a fresh, bullish phase after the RBI’s decisive rate cut. Backed by favourable macro conditions, supportive policy, strong technical, and growing retail and institutional participation, the stage is set for further upside. The surge in Nifty’s 25000 put OI only reinforces the view that the bulls are taking charge, and the market is geared for an extended rally.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

The image added is for representation purposes only

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