FPIs turn buyers, invest Rs 6,480 crore in Indian markets in October
Foreign investors return to Indian markets after three months of outflows, investing Rs 6,480 crore in October amid strong macroeconomic trends
After withdrawing money on a net basis for the past three months, Foreign Portfolio Investors (FPIs) have turned buyers with a Rs 6,480-crore investment in October so far, driven by strong macroeconomic factors. The renewed inflow in October marked a significant shift in sentiment and reflected fresh confidence among global investors towards Indian markets.
The development follows persistent outflows in recent times, with FPIs pulling out Rs 23,885 crore in September, Rs 34,990 crore in August, and Rs 17,700 crore in July, data from depositories showed. Experts have highlighted several key factors influencing market trends in the trade and said that ongoing earnings are expected to determine the direction of the FPIs in the coming weeks.
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Key factors for change
Experts have pointed out several reasons behind the recent trend, including an increasingly favourable global liquidity environment and a reduced valuation differential between India and other markets.
According to Himanshu Srivastava, Associate Director of Manager Research, Morningstar Investment Research India, India's macro backdrop has remained relatively strong among emerging markets, with stable growth, manageable inflation, and resilient domestic demand helping the country stand out.
He noted that global liquidity conditions were gradually easing, with expectations of rate cuts or at least a pause in the US. As risk appetite returns, funds are flowing back into higher-return emerging markets. Additionally, Indian valuations, which had been under pressure, have now become more attractive, prompting renewed "dip-buying" interest, he added.
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Improved relative performance
Echoing a similar view, Geojit Investments Chief Investment Strategist VK Vijayakumar said the principal reason for this shift in FPIs' strategy is the reduced valuation differential between India and other markets. India's underperformance over the past year, he said, has opened up prospects for improved relative performance.
Vaqarjaved Khan, Senior Fundamental Analyst, Angel One, pointed out that the latest inflows can also be attributed to a moderation in trade tensions between the US and India. He noted that the selling pressure seen earlier in 2025 has made the valuation multiples of Indian equities.
Looking ahead, experts believe that future trade developments and the ongoing earnings season would play a key role in determining the direction of the FPI flows in the coming weeks.
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Slack in FPI
Despite the recent inflow, FPIs have still withdrawn around Rs 1.5 lakh crore so far in 2025. Meanwhile, in the debt market, FPIs invested about Rs 5,332 crore under the general limit and Rs 214 crore through the voluntary retention route in October so far (up to the 17th), indicating continued interest in Indian debt instruments.