FPIs Sell ₹8749 Cr Equities, Rebound After RBI Rate Cut

FPIs Pull Out ₹8,749 Crore—Then RBI’s Surprise Rate Cut Changes Everything

You know how it goes with FPIs—one minute they’re running for the exits, the next they’re jumping back in like nothing happened. That’s exactly what played out in the first week of June. Foreign investors yanked ₹8,749 crore from Indian stocks, only to reverse course after the RBI dropped a 50-basis-point rate cut bomb on June 7. Talk about mood swings. But here’s the thing: this wasn’t just random volatility. It shows how policy decisions—especially unexpected ones—can flip investor sentiment overnight.

June Started Rough for Indian Markets

Man, what a week. FPIs came out swinging—in the wrong direction. ₹8,749 crore net outflow in equities? Ouch. That’s the biggest single-week sell-off since March. And you could see why—global markets were shaky thanks to Fed uncertainty, everyone was nervous about what the RBI would do, and let’s be honest, some sectors like banking and IT were looking a bit too pricey after their recent runs. Profit booking? More like panic selling if you ask me.

Then Came the RBI’s Game-Changer

Seriously, who saw that coming? A full 50-point cut when most analysts were predicting 25 at best. The RBI governor basically said “inflation’s under control, let’s focus on growth now”—and boom, markets went wild. Within two days, FPIs were net buyers again. Why? Because cheaper money means companies can breathe easier, especially in rate-sensitive sectors. A buddy at a Mumbai brokerage put it perfectly: “This isn’t just about liquidity. It’s India telling investors ‘we’re open for business.'”

Where the Smart Money Moved

Here’s where it gets interesting. The selling wasn’t across the board—financials took the hardest hit (looking at you, Karnataka Bank, with your 3.2% drop in FPI holdings). Tech stocks got trimmed after their recent rally too. But post-rate cut? Suddenly infrastructure and small-caps like KLM Axiva became the hot tickets. Classic FPI behavior—they’ll run from risk, then chase it twice as hard when the mood shifts. Even consumer goods, which got dumped early on, came back as people started feeling better about discretionary spending.

Three Stocks That Tell the Story

• Fone4 Communications: FPIs couldn’t make up their minds—in and out like yo-yos on telecom policy rumors
• Karnataka Bank: Got hammered over margin worries pre-cut, then recovered some ground
• KLM Axiva: That small-cap magic—12% FPI inflow spike after the announcement

What’s Next? Your Guess Is As Good As Mine

Short term? It’s all about the Fed’s next move and whether the monsoon plays nice. Long term—well, India’s still looking better than most emerging markets with that 6%+ growth forecast. But here’s the kicker: an Edelweiss report I read put it bluntly—”Rate cuts are just painkillers. Earnings need to deliver the real cure.” Can’t argue with that. Still, for now at least, the RBI’s timing has given everyone a reason to smile.

The Bottom Line

FPI flows are like that friend who can’t decide where to eat—constantly changing their mind. Last week proved again how fast narratives can shift. The real test? Whether this inflow surge lasts beyond the initial rate-cut high, and if sectors like infra can actually turn cheap money into real growth. The RBI bought us some optimism, but like my broker friend says—”In markets, there’s no such thing as a free lunch.”

If You Want to Dig Deeper

• Full text of that surprising RBI statement
• SEBI’s real-time FPI tracker
• Quick explainer: FPIs = foreign investors playing our markets; Rate cut = RBI making loans cheaper to boost the economy