It appears that overseas investors have altered their bearish stance on Asia’s third-largest economy, turning net buyers in October after three consecutive months of selling through September.
The strong start to the September quarter earnings and attractive valuations, coupled with signs of recovery in domestic growth, have seemed to change the FPIs’ outlook, as evidenced by the slowdown in their sustained selling and resumption of adding Indian stocks to their portfolios.
The renewed interest also propelled the front-line indices to edge closer to their record highs, with Nifty 50 and Sensex now just 1.55% away from reaching their September 2024 peaks.
Pour ₹7,362 crore into Indian stock market in October
Having withdrawn billions from local equities earlier in search of better opportunities in other emerging markets, FPIs have poured in ₹7,362 crore in October so far, according to the NSDL.
They have withdrawn a cumulative ₹76,619 crore in three months. Of the nine months of 2025, they remained net buyers in just three months, with May marking the biggest inflow of ₹19,860 crore, and the largest outflow was recorded in January with ₹78,027 crore.
Alongside the recovery in earnings, the potential trade deal between India and the USA, which has remained stalled recently, also came on track, as both countries resumed the talks, and the Street believes that the announcement could be made soon.
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.
Meanwhile, global brokerage firms have retained their confidence on Indian stock market, citing a recovery in the earnings in the second half of FY26, which could potentially be led by GST rate cuts, RBI repo cuts, and the government’s earlier policy measures, all targeted to lift consumption in the economy.
Overall outflows still exceed ₹1.45 lakh crore
Though the FPIs resumed their buying streak, which is relatively smaller, the outflows still stood at ₹1.47 lakh crore in 2025 so far. In the first nine months, they have withdrawn ₹1.56 lakh crore, the second highest on record for the January-September period.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 9.41% 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 ₹6.10 lakh crore into equities, marking a record yearly inflow.
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