After withdrawing billions from the Indian stock market, overseas investors have moderated their selling, turning into net buyers in recent sessions and supporting frontline indices to remain above key levels.
Having been net sellers for three consecutive months through September, foreign portfolio investors (FPIs) slowed their selling in October and, over the last four trading sessions, turned into net buyers, infusing a cumulative ₹3,289 crore into local equities, according to the exchange data.
Although the net inflows are significantly lower than the sharp sell-off seen in previous months, analysts have highlighted this shift in their stance.
What’s behind FPI buying?
Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, highlighted two key reasons behind their comeback.
Vijayakumar explained that the valuation gap between India and other markets, which had been high earlier, had come down significantly in recent weeks following the rally in other markets and consolidation in the Indian market.
He also pointed out that expected earnings revival contributed to FPIs altering their strategy toward buying. “The growth and earnings prospects for India have been revised upward by market experts. The GST cuts and the low-interest regime are expected to boost India Inc.’s earnings in FY27, which the market will soon start discounting,” said Vijayakumar.
Meanwhile, global market sentiment has turned negative again with the resurgence of US-China trade tensions, following President Trump’s threat to impose 100 percent tariffs on imports from China and restrictions on several critical US exports to China. According to Vijayakumar, FPI flows going forward will depend on how this renewed trade conflict unfolds in the coming days.
The Indian stock market had delivered muted returns over the past year due to concerns over rich valuations, higher tariffs, relentless FPIs selling and subdued performance by India Inc., while key global markets repeatedly hit record highs, led by AI and chip-related stocks.
FPIs sell stocks worth ₹1.56 lakh crore in 2025
Foreign portfolio investors withdrew ₹23,885 crore from Indian equities in September, extending their selling streak for a third straight month. The sell-off accelerated following the H1-B visa fee increase, causing massive outflows from IT stocks.
So far this year, foreign investors have offloaded ₹1.56 lakh crore, the second highest on record for the January-September period. The only larger nine-month exodus was in 2022, when FPIs sold ₹1.97 lakh crore due to the Russia-Ukraine war, aggressive global rate hikes, and a surging U.S. dollar.
However, inflows resumed in late 2022 after markets started pricing in U.S. rate cuts, which brought down full-year outflows to ₹1.46 lakh crore.
Despite these substantial outflows, the Nifty is up 6.61% for the year and on track for its 10th straight annual gain, thanks to sustained buying by domestic institutions. According to exchange data, domestic mutual funds and insurance firms have poured ₹5.9 lakh crore into equities, marking record yearly inflows.
India was among the first major markets to rebound after US President Donald Trump announced global tariffs in April, drawing investors who saw the nation as a safe spot amid trade tensions. Instead, as other countries agreed to deals, the US slapped a 50% tariff on Indian goods, the steepest in Asia, triggering massive outflows and putting heavy pressure on the local currency.
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