Indian share market is currently in recovery mode. After the strong momentum of September 2024, there was a bounce in December, but still the portfolios of most investors are in loss. Whereas China and Hong Kong markets are on record rally. Hang Seng Index has shown a rise of about 29% in the last one year, due to which foreign investors are withdrawing money from India and shifting towards China.
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Fdi in india: This news is going to be relaxed in terms of Indian economy, when for the first time in four years, foreign direct investment in the country has reached a record level. A few days ago, American agency S&P Global upgraded India’s rating. Along with this, the government has taken several important steps to boost the economy. Meanwhile, according to data released by RBI on Wednesday, the average FDI in the country has increased to $ 11.11 billion in the country for the first time in four years.

FDI record level

This is the highest ever since the average $ 12.32 billion FDI in July 2021. While the FDI was $ 9.57 billion in June a month ago, the FDI figure in July 2024 was $ 5.54 billion, which was almost half of this year’s July.

FDI comes from Singapore the most, followed by the Netherlands, Mauritius, US and UAE. About three fourths of the total FDI from these countries comes to India. Manufacturing and services sectors, including communications, computer and business services, are the most FDIs coming.

Importance of FDI

Significantly, FDI is an important indicator towards telling the health of the economy of any country and the restoration of foreign investors. Earlier, S&P had upgraded India’s rating from BBB to BBB on 14 August. A day later, PM Modi announced several economic reforms on August 15 to increase the pace of domestic economy. One of these announcements was the announcement of GST rates, which has been made effective on Monday earlier this week.

Even though there is a period of uncertainties in global trade, policy and financial markets during FY 2025-26, FDI figures are continuously increasing. Net FDI had increased to $ 10.75 billion during the first four months of the current financial year, which is three times more than the same period a year ago. At the same time, the average FDI has increased by 33 percent to 37.71 billion dollars. On the other hand, Indian companies’ direct investment abroad has increased by 44 percent to $ 10.67 billion.

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Fall in FDI Flow: There has been a tremendous decrease in the flow of foreign direct investment in India and it has fallen by 96.5 percent, which is so far low. According to the RBI, the flow of pure FDI in the country during the last financial year 2025 was $ 353 million, which was $ 10 billion during 2024 i.e. 2024. The RBI said in the bulletin issued that the reason for this is the increase in FDI and repatriation going out. You can also understand this that the money that came in India went out more than that.

Why FII Flow reduction

One reason for the decrease in pure foreign direct investment is to return more money than India. During the financial year 2025, $ 49 billion left India, while the figure was $ 41 billion during the financial year 24. RBI said that the net flow of stable FDI was 86 percent less than the volatile portfolio flow. Portfolio flows during the whole year stood at $ 2.67 billion.

The reason for a major decline in FDI flow is also believed to be the exit of alpha wave global and other investors from IPOs like Swigy and Vishal Mega March during this financial year.

Opposition raising questions

The Congress said on Sunday that FDI in India) The decline in flow shows great uncertainty related to investment in the country. A large number of companies are preferring to invest abroad. All India Congress Committee (AICC) general secretary Jairam Ramesh said in a post on the social media forum ‘X’ that the recently released Reserve Bank of India (RBI) data shows that in 2024-25, the net FDI flow in India unexpectedly reduced by 96 percent to just 0.4 billion US $.

Jairam Ramesh said that whatever official clarification is being given regarding this huge decline, the truth is that it reflects tremendous uncertainty about investment in India -which is discouraging not only foreign investors, but also Indian companies and are now giving priority to investing abroad instead of investing in the country.

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Rupee opens stronger: After the ceasefire between India and Pakistan on the border, the positive trend in the market due to reduced tension and the US-China trade deal has added new enthusiasm to the Indian rupee. On Tuesday 13 May, the rupee strengthened 74 paise to 84.62 per dollar against the dollar.

Forex traders say that the frequent interest and purchases of foreign investors in Indian assets have given tremendous support to the local currency. Significantly, after the Pahalgam terror attack on 22 April, India attacked and demolished 9 terrorist bases in Pakistan and its occupied Kashmir on 7 May. After heavy tension between the two countries, India and Pakistan announced a ceasefire on Saturday to stop firing and military action immediately.

Rupee bounced after ceasefire

The rupee opened at 84.70 per dollar in the Interbank Forex Exchange Market. After that, he fell at 84.74 against the dollar. However, it again returned to 84.62 per dollar, which shows a gain of 74 paise against the previous closed price. The rupee closed at 85.36 against the US dollar on the last day of the last week i.e. on Friday.

The foreign exchange market was closed on Monday due to Buddha Purnima. Meanwhile, the dollar index, showing the US dollar position against six major currencies, fell 20 percent to 101.58.

Stock market declining phase

The Indian stock market saw a decline on Tuesday. The BSE Sensex slipped down 902.68 points to 81,527.22 points, while the Nifty slipped 207.15 points to 24,717.55 points. International standard Brent crude fell by 0.22 percent to $ 64.82 per barrel.

According to the stock market data, foreign institutional investors (FIIs) were living on Monday and purely bought shares worth Rs 1,246.48 crore. It is worth noting that the US and China recently informed about the two countries to be agreed between the two countries for the 90-day ban on each other.

Share Market: Pakistan and Pakistan administered Kashmir was attacked by the Indian Army on Tuesday and Wednesday, on the night of the Indian Army and destroyed nine terrorist hideouts. Due to this military action of India, heavy firing is being done by Pakistan on the LOC.

Will foreign investors pull their hands back from Indian markets due to increasing tension between the two countries? Quoting all the experts, Reuters have informed in their report that the LOC is unlikely to have any significant impact on the sentiments of foreign investors towards Indian markets.

Investors are confident of this

India’s economy, which has crossed the $ 4 trillion dollars, has a direct trade with Pakistan. After the terrorist attack in Pahalgam, business between the two countries has stopped. As a result, India’s missile attacks across the border were limited to domestic equity, currencies or bonds. Investors believe that there is less possibility of fierce battle between the two countries.

Conflict has no permanent impact on India

According to the report of India Today, Ajay Marwah, head of fixed income in Nuwama Group, says that if the situation improves soon, then investment will not be damaged. City analysts have mentioned in a research note that if we look at the history of the struggle between India and Pakistan, it has not shown any permanent impact on the markets of India.

For example, the rupee remained stable after the violence in Pulwama-Balakot of 2019 and a temporary growth of 15 basis points was observed before the bond yield declined. A similar pattern was seen in 2020 during the Galwan Valley Struggle with China, when the rupee was initially weakened by 1 percent, but later recovered again.

Why do investors trust in India unwavering?

Investors have increased confidence in Indian markets after US President Donald Trump’s discounted tariff on India and then temporary ban on it for 90 days. It is also to be noted that India’s economy is moving fast. The Reserve Bank of India has estimated GDP growth of 6.5 percent for the current financial year.

From the beginning of April, when the US announced a new tariff, the Nifty 50 index has booured a 4.6 percent. According to the IMF data, India will become the fourth largest economy, overtaking Japan by 2025, which is currently at number five after America, China, Germany and Japan.

In addition, the trade agreement between India and Britain was finalized earlier this week. There is also a rapid negotiation on the bilateral agreement with the US. These are many big reasons due to which investors confidence in Indian markets is unwavering.

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