Foreign Institutional Investors remained net buyers of Indian equities for the twelfth consecutive trading session in May 2026, taking the cumulative net inflow for the month to Rs 42,318 crore. This represents the strongest monthly FII buying since the post-COVID reopening rally of 2021 and has been the primary driver of the recent market surge.
The sustained inflows reflect a confluence of positive factors: a weakening US dollar, dovish signals from the US Federal Reserve, India's superior growth differential versus emerging market peers, and improving corporate earnings quality. Global funds tracking MSCI Emerging Markets are also overweight India, providing structural tailwinds for equity inflows.
Domestic Institutional Investors sold Rs 8,240 crore during the same period, likely booking profits at elevated valuations. However, the systematic investment plan engine continues to provide a floor, with SIP inflows hitting Rs 28,000 crore in April. Market participants expect FII flows to remain positive in June barring a major risk-off event globally.
