Foreign Investors Return to Indian Markets in October Amid Positive Global and Domestic Cues
Foreign investors are once again showing confidence in Indian markets this October as valuation gaps narrow and growth prospects improve. Here’s why FPIs are turning buyers and what could drive their next moves.
Foreign Investors (PC- Social Media)
New Delhi, Oct 12 – After months of selling, foreign portfolio investors (FPIs) have started buying Indian stocks again this October. Market experts say this change signals a renewed faith in India’s strong economic story. Over the past week, foreign investors purchased shares worth Rs 3,289 crore, showing a clear shift in sentiment after heavy outflows in September.
The rebound in FPI activity has brought fresh optimism to Dalal Street. Analysts believe that both domestic reforms and global developments are creating a more stable environment for investors.
Why Are FPIs Turning Buyers Again?
According to Dr. V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services, there are two key reasons behind this shift. The first is the narrowing valuation gap between India and other global markets. Earlier, Indian equities appeared expensive compared to their global peers. But after rallies in other markets and a short consolidation phase at home, India’s valuations now look much more attractive.
The second reason is improved growth and earnings forecasts for Indian companies. With GST rate cuts and a continued low-interest-rate environment, corporate India is expected to perform well in FY27. Investors are beginning to factor in these positive trends, leading to renewed buying interest.
Global Developments Impacting Investor Sentiment
While India remains a strong story, global market trends continue to play a big role in FPI activity. Recently, concerns have risen again over the US–China trade tensions. US President Donald Trump’s latest statement about imposing 100 per cent tariffs on Chinese imports and restricting certain exports has caused some uncertainty worldwide.
However, India remains relatively insulated due to its diverse economy and strong domestic demand. Additionally, the Israel–Hamas ceasefire talks and signs of progress in a potential India–US trade deal have helped calm global market nerves.
Market Gains Reflect Renewed Confidence
As per Siddhartha Khemka, Head of Research at Motilal Oswal Financial Services, the Nifty50 index rose by 104 points to close at 25,285 last Friday. This gain came amid easing geopolitical tensions and fresh optimism in the global economy. He noted that renewed foreign investor buying played a big role in lifting market mood.
Adding to the positive tone, India and the UK announced multiple collaborations in areas like education, critical minerals, defence, and climate change, signaling a stronger global partnership outlook.
Looking Ahead: What to Expect from FPIs
Market experts believe that FPI activity in the coming months will depend on how global trade developments unfold. If the US–China dispute escalates further, risk sentiment may weaken. However, India’s steady growth, corporate earnings, and government policies continue to make it one of the most attractive markets among emerging economies.
FPIs had sold equities worth Rs 27,163 crore through exchanges in September, but they continued to show long-term faith by buying equity worth Rs 3,278 crore through the primary market. This indicates that while short-term concerns remain, India’s long-term investment story is still strong.
Key Economic Factors to Watch
On the macroeconomic front, all eyes are now on India’s retail inflation data for September, set to be released soon. Inflation trends will play a crucial role in shaping the Reserve Bank of India’s policy stance and in influencing foreign investment flows.
A stable inflation outlook, along with steady economic growth and improving global sentiment, could further boost investor confidence in Indian markets over the next few months.
India’s Position in the Global Market Landscape
Even with short-term global uncertainties, India continues to stand out as a fast-growing economy with strong domestic consumption and reform momentum. The government’s continued focus on infrastructure, technology, and manufacturing growth has made India a preferred destination for global investors seeking long-term opportunities.
As the festive season begins and earnings reports start rolling in, experts expect continued momentum in both institutional and retail participation, strengthening the Indian market’s position among global peers.