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.
Kindly note the image has been posted only for representational purposes. Photograph: Kind courtesy Free stock photos from www.rupixen.com/Pixabay.com
The development comes after 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.
The renewed inflow in October marks a significant shift in sentiment and reflects fresh confidence among global investors towards Indian markets.
Several key drivers underpin this reversal.
According to Himanshu Srivastava, Principal, Manager Research, Morningstar Investment Research India, India’s macro backdrop remains relatively strong among emerging markets, with stable growth, manageable inflation, and resilient domestic demand helping the country stand out.
He further noted that global liquidity conditions are 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 turned more attractive, prompting renewed “dip-buying” interest.
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 under-performance 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 made Indian equities’ valuation multiples more attractive compared to global peers.
Looking ahead, experts believe that future trade developments and the ongoing earnings season will play a key role in determining the direction of FPI flows in the coming weeks.
Despite the recent inflow, FPIs have still withdrawn around Rs 1.5 lakh crore so far in 2025.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 this month (till October 17), indicating continued interest in Indian debt instruments.
