Foreign portfolio investors have returned to Indian equities, triggering a wave of optimism in the markets. But before breaking out the confetti, it’s worth asking: are they here for India, or merely fleeing elsewhere?After offloading over $22 billion worth of Indian equities between October and January—primarily in the favour of the United States—FPIs have reversed course, pouring in nearly $4 billion across April and May. The turn coincided with the Sensex touching a one-year low of 71500 points in April. Since then, the index has surged, inching back toward the highs scaled last year. Yet, this rally has been narrow, driven almost exclusively by large caps, with mid- and small-cap stocks still lagging. That in itself is telling.
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