After three consecutive months of net selling, foreign portfolio investors (FPIs) have turned net buyers in the Indian stock market in October 2025, injecting ₹7,300 crore into the market. This comes as a welcome shift in sentiment after persistent outflows in July, August and September, where FPIs withdrew ₹17,700 crore, ₹34,990 crore, and ₹23,885 crore respectively.
The renewed interest from overseas investors has also helped propel the front-line indices closer to their record highs. The Nifty 50 and Sensex are now just 1.55% away from reaching their September 2024 peaks. On October 20, 2025, the Nifty closed above 25,800, marking a fourth straight day of gains.
Several factors have contributed to this change in FPI strategy. Strong macroeconomic indicators, attractive valuations, and signs of recovery in domestic growth appear to have altered the FPIs' outlook on Asia's third-largest economy. India's macro backdrop remains relatively strong compared to other emerging markets, boasting stable growth, manageable inflation, and resilient domestic demand.
Easing global liquidity conditions and expectations of rate cuts or a pause in the US have also played a role. As risk appetite returns, funds are flowing back into higher-return emerging markets. Furthermore, Indian valuations, which had been under pressure, have become more attractive, prompting renewed "dip-buying" interest.
The potential trade deal between India and the USA, which has recently resumed talks, is also being viewed positively by the Street, with expectations that an announcement could be made soon.
Despite the positive inflows in October, FPIs have still withdrawn a significant amount from Indian equities in 2025. So far this year, the net outflow stands at approximately ₹1.5 lakh crore. Of the nine months of 2025, FPIs have been net buyers in only three. May saw the biggest inflow at ₹19,860 crore, while January recorded the largest outflow at ₹78,027 crore.
Concerns over tariffs, H1-B visas, and the continued shutdown in the US have also influenced FPI flows. However, FPI buying has been evident in sectors like banking, autos, and FMCG, which are considered strong India-centric investment stories.
Looking ahead, trade developments and the ongoing earnings season will be key determinants of FPI flows in the coming weeks. Experts believe that a profit-led revival is essential for the market's performance in the new Samvat year. Corporate profit recovery is key to market performance.
