India has recorded its first sign of relief in foreign portfolio investor (FPI) flows after weeks of sustained selling, but underlying sentiment remains cautious, according to Elara Capital’s Global Liquidity Tracker dated April 24, 2026 .

After nearly seven consecutive weeks of outflows, India saw a modest net inflow of $106 million. This comes after cumulative withdrawals of around $5 billion in the previous six weeks, marking a pause in the heavy selling trend. However, the improvement appears limited and does not yet signal a strong comeback in investor confidence.

The primary reason behind this stabilisation is a sharp reduction in selling pressure. Weekly outflows from India-focused funds have dropped significantly — from a peak of $1.2 billion to around $180 million. This suggests that while investors are no longer exiting aggressively, they are also not returning in a meaningful way.

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A closer look at the data shows a clear divide in investor behaviour. Long-only funds, which are typically driven by fundamentals and long-term conviction, continue to see outflows of around $400 million. This indicates that institutional investors are still cautious about increasing exposure to India.

In contrast, passive flows have provided some support to the market. Exchange-traded funds (ETFs) recorded inflows of about $220 million during the week, helping push overall flows into positive territory. However, this needs to be interpreted carefully.

ETF flows are generally tactical and short-term in nature. They are often driven by global asset allocation decisions, liquidity conditions, or macro trends rather than India-specific fundamentals. This means the recent inflow may not reflect strong confidence in India’s growth story, but rather a temporary allocation shift. In simple terms, the money coming in is more opportunistic than committed.

There is, however, one encouraging signal. US-domiciled funds, which had been among the largest sellers in recent weeks, have turned marginal buyers with inflows of $225 million. This follows cumulative outflows of $3.3 billion from these funds over the previous seven weeks. While still early, this shift could indicate that the most aggressive phase of selling is behind us.

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Globally, liquidity conditions remain supportive. US equity markets continue to attract strong inflows in the range of $10–22 billion per week, while global and emerging market funds are also seeing steady allocations. However, India is not yet a major beneficiary of this global risk-on environment.

Instead, investors appear to be selective, favouring specific markets and sectors with clearer near-term visibility. At the same time, flows into commodities have started to soften after a strong rally, and precious metals like gold have seen stabilisation, while silver remains weak.

For India, the message is clear. The recent inflow is a positive development, but it is not strong enough to indicate a full reversal in trend. The continued outflows from long-only funds and reliance on ETF-driven inflows highlight that investor confidence is still fragile.

A sustained recovery in flows will likely require stronger earnings visibility, macro stability, and renewed interest from active global investors. Until then, this phase is best seen as a stabilisation period rather than the start of a fresh inflow cycle.

Published on: Apr 24, 2026 3:03 PM IST