International Investors Become Buyers as Market Shows Positive Trends.

Foreign Investors Show Increased Buying Activity in Indian Markets

On Sunday, analysts reported a notable slowdown in the selling momentum of foreign portfolio investors (FPIs) in Indian markets during October.

This shift in FPIs appears to be influenced by two main factors. First, the valuation gap that previously made India seem more expensive compared to other markets has narrowed recently, thanks to gains elsewhere and some consolidation within the Indian market.

“Secondly, experts have adjusted their expectations regarding India’s growth and earnings, raising them slightly. Cuts in GST alongside a low interest rate environment are likely to positively impact India’s earnings for FY27, which the market will begin factoring in soon,” explained Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments.

In the last four trading sessions before October 10, foreign investors were seen buying in the spot market, with purchasing totaling approximately Rs 3,289 crore.

However, the rekindling of the US-China trade war has dampened global market sentiment again, particularly after President Trump threatened to impose significant tariffs on Chinese imports and restrict key US exports to China.

Analysts suggest that future FPI inflows will hinge on how the situation regarding this trade conflict progresses in the upcoming days.

Siddhartha Khemka, head of research at Motilal Oswal Financial Services Wealth Management, mentioned that geopolitical tensions have started to ease, particularly with Israel and Hamas reaching an initial agreement on a ceasefire. On Friday, the Nifty 50 index saw a rise of 104 points, closing at 25,285 points, buoyed by improving global sentiment and possible advancements in an India-US trade deal.

“The return of FPI buying also played a role in enhancing market sentiment. Furthermore, India and the UK announced various joint initiatives in sectors like education, critical minerals, climate change, and defense,” he said.

Forecasts indicate that FPIs may reduce selling activities moving forward as valuation differences lessen and expected earnings in India improve for FY27.

Despite the selling trend persisting in September, with sales through exchanges amounting to Rs 27,163 crore, FPIs did engage in purchasing through the primary market, acquiring shares worth Rs 3,278 crore during that month.