Mumbai, Nov 2 After three months of steady withdrawals, foreign investors made a strong comeback in October, turning net buyers in the Indian market with an investment of Rs 14,610 crore.
The renewed inflows were supported by robust corporate earnings, the US Federal Reserve’s rate cut, and growing optimism over the possibility of US-India trade talks progressing soon.
Data from depositories showed that this turnaround follows a prolonged phase of outflows, with foreign portfolio investors (FPIs) withdrawing Rs 23,885 crore in September, Rs 34,990 crore in August, and Rs 17,700 crore in July.
The shift in October marks a significant improvement in sentiment among global investors towards India.
The reversal in FPI activity was driven by improved risk sentiment and attractive valuations after recent market corrections, according to analysts.
They said that resilient corporate earnings across key sectors also boosted investor confidence.
Market watchers added that easing inflation, expectations of a softer interest rate cycle, and supportive domestic reforms like GST rationalisation have further strengthened India’s appeal to global investors.
“If brisk demand conditions continue, corporate earnings will improve further, making valuations fair. In such a scenario, FPIs are likely to remain buyers,” analysts mentioned.
With inflation cooling, interest rates easing, and progress on trade negotiations between India and the US, the overall market sentiment looks positive for the coming months.
In the debt segment, foreign investors also remained active, investing Rs 3,507 crore under the general limit while pulling out Rs 427 crore through the voluntary retention route in October.
Analysts believe that if global conditions remain stable and domestic earnings continue to improve, foreign inflows could stay strong, providing much-needed support to Indian equities.
"The red hot IPO market and the high premium investors are willing to pay for new issues are encouraging FIIs to invest through the primary market," they added.
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