Foreign Investors Turn Net Buyers in India in October After Three Months of Outflows

Foreign Portfolio Investors (FPIs) have reversed their trend of outflows, becoming net buyers in the Indian stock market in October with an infusion of ₹14,610 crore. This marks a substantial shift after three consecutive months of significant withdrawals, amounting to ₹23,885 crore in September, ₹34,990 crore in August, and ₹17,700 crore in July.

The renewed investor confidence is attributed to several key factors. Firstly, corporate earnings for the second quarter of the fiscal year 2026 have shown resilience, exceeding expectations. Secondly, the US Federal Reserve's decision to cut interest rates by 25 basis points has improved the global risk sentiment. Additionally, hopes for the materialization of US-India trade talks have further bolstered optimism among global investors. Experts also point to attractive valuations following recent market corrections, easing inflation, expectations of a softening interest rate cycle globally, and supportive domestic reforms like GST rationalisation as contributing factors.

Looking ahead, the sustainability of these inflows will hinge on continued macroeconomic stability in India, a benign global economic environment, and consistent corporate earnings performance in the upcoming quarters. While FPIs have withdrawn approximately ₹1.4 lakh crore year-to-date in 2025, the recent positive trend suggests a potential for continued buying activity in November, provided global headwinds ease further and progress is made on trade negotiations.

Impact This renewed buying interest from foreign investors is generally positive for the Indian stock market. Increased demand for Indian equities can lead to upward pressure on stock prices and overall market indices. Sustained inflows can contribute to market stability and growth, signalling global confidence in India's economic prospects. A rating of 8 out of 10 is assigned for its potential market impact.

Difficult Terms Explained: FPIs (Foreign Portfolio Investors): These are investors from foreign countries who invest in a country's financial assets, such as stocks and bonds. They typically invest in smaller amounts compared to Foreign Direct Investment (FDI). Basis Points (bps): A unit used to measure interest rates and other financial percentages. One basis point is equal to 1/100th of a percent, meaning 100 basis points equal 1 percent. GST rationalisation: Refers to the process of simplifying, streamlining, or making the Goods and Services Tax (GST) system more logical and efficient, often involving adjustments to tax slabs, procedures, or compliance requirements. Macro stability: Refers to a state of an economy where key macroeconomic indicators such as inflation, fiscal deficit, current account deficit, and currency exchange rates are stable and predictable, fostering investor confidence and sustainable growth.