The month of October saw a break in persistent outflows by foreign portfolio investors (FPIs) after three-long months as strong macroeconomic factors emerged, reflecting renewed confidence among global investors.
FPIs turned buyers with a ₹6,480 crore investment in the month gone by so far.
The development comes after FPIs pulled out ₹23,885 crore in September, ₹34,990 crore in August, and ₹17,700 crore in July, data from depositories showed.
This shift towards Indian markets is being attributed to India’s growing GDP figures, a resilient domestic demand, and expectations of another interest rate cut in the US.
Himanshu Srivastava, Principal, Manager Research, Morningstar Investment Research India, gives credit to India’s macro backdrop, which remains relatively strong among emerging markets, along with stable growth, manageable inflation, and resilient domestic demand – all of which are helping investors’ risk appetite return bringing in cash into higher-emerging markets.
Also Read: FPIs continue withdrawals for third month in September
He further noted that global liquidity conditions are also gradually easing, with expectations of rate cuts or at least a pause in the US.
Additionally, Indian valuations, which had been under pressure, have now turned more attractive, prompting renewed “dip-buying” interest.
Echoing a similar view, the Chief Investment Strategist at Geojit Investments, VK Vijayakumar, said the principal reason for this shift in the 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, agrees, pointing 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.
In the near future, experts believe trade developments and the ongoing earnings season will play a key role in determining the direction of FPI flows.
However, it must be noted that despite the recent inflow, FPIs have still withdrawn around ₹1.5 lakh crore so far in 2025.
Meanwhile, in the debt market, FPIs invested about ₹5,332 crore under the general limit and ₹214 crore through the voluntary retention route this month (till October 17), indicating continued interest in Indian debt instruments.
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