FPIs Inflows Hit Rs 35,598 Crore In Oct—Highest In 2025: What Does This Mean For Indian Markets?

Foreign institutional investors reversed a three-month sell-off and turned net buyers in Indian markets last month with total inflows exceeding Rs 35,000 crore—the highest so far in 2025. The trend reversal comes after a prolonged spell of persistent outflows, with FPIs pulling out Rs 23,885 crore in Sept, Rs 34,990 crore in Aug., and Rs 17,700 crore in July.

According to D-Street analysts, the renewed inflows by FPIs in Oct. marks a notable shift in sentiment, reflecting fresh confidence among global investors towards Indian markets. Many believe India's under-performance over the past year has opened scope for improved relative performance.

According to NSDL data, FPIs bought Rs 14,610 crore in Indian equities during Oct., and the total inflow, taking into account debt, hybrid, debt-VRR, and equities, stands at Rs 35,598 crore. "The figure includes some bulk deals too. The trend of sustained buying/ investing through the primary continued in Oct. too with a buy figure of Rs 10,707 crore," said Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Ltd.

Despite the recent uptick in equity inflows, FPIs have withdrawn around Rs 1.4 lakh crore so far in 2025. Also, FPIs turned sellers after one month of buying, starting Nov. on a subdued note. According to NSDL data, FPIs have already pulled out Rs 9,519 crore from Indian equities this month and the total sell-off stands at Rs 8,006 crore. As of Nov. 4, FPIs were net sellers of Indian shares for the fifth straight session, as per NSE.

Ross Maxwell, Global Strategy Lead at VT Markets, the stronger inflows from FPI’s in Oct. is backed by the fact India remains one of the fastest-growing major economies, underpinned by strong macro fundamentals. Data shows that India's GDP growth remains resilient, inflation is moderate, and government supports infrastructure and manufacturing.

"After seeing outflows due to a perceived overvaluation of Indian stocks against other emerging markets, these factors have made India relatively attractive again compared to other emerging markets who are facing sluggish growth or policy instability," said Maxwell.

FPIs are likely seeing opportunities particularly in sectors such as financial services, renewable energy, and consumer tech, to gain early exposure to high quality companies aligned with India’s long-term growth ambitions.

At the same time, volatile global bond yields and currency fluctuations have made the secondary markets riskier, prompting investors to deploy capital through IPOs where valuations often appear more reasonable and allocations more strategic, according to market analysts.

The surge in FPI participation in IPOs indicates a subtle shift rather than a broader reversal of cautious sentiment. "While overall FPI flows into the secondary market remain uneven due to global rate uncertainty and geopolitical risks, primary market inflows show investors are differentiating between short-term volatility and long-term opportunity," added Maxwell.

He explained that by being selective and entering through IPOs, FPIs are signaling confidence in India’s long-term economic growth story and earnings potential, while maintaining a measured approach to risk.

Overall the Oct. inflows represent both a vote of confidence in India’s structural story and a tactical adjustment on global headwinds. "The trend underscores India’s growing role as a preferred destination for global capital seeking growth, stability, and credible investment opportunities," he concluded.

According to Dr. VK Vijayakumar of Geojit, the aggregate buy figure through the exchanges in Oct. doesn’t mean that the FPIs will continue to be in buy mode, going forward. The relatively higher valuations in India may prompt FPIs to sell again. Whether they will buy or sell will depend on the trajectory of India’s corporate earnings growth, as per the analyst.

"There are clear signs of earnings recovery now. If the brisk demand conditions in the market sustains, earnings will improve, which, in turn, will make valuations fair. In such a scenario FPIs will turn buyers," he said.

According to experts, the early sell-off seen in Nov. is an indication that they will continue to sell on rallies. Higher valuations in India and muted earnings growth are restraining FPIs who are more focused on cheaper markets with better earnings growth. 

"However, it is likely to be a short-term challenge. Medium-term prospects look good with robust GDP growth and impressive sales data, particularly from automobiles. Modest earnings growth of banking and poor earnings growth of IT will restrain earnings growth in FY26," said Dr. VK Vijayakumar.

"Impressive earnings growth around 15% is likely in FY27. The market will soon start discounting this. A significant market trend is the resilience of the PSU banking space. This segment is even now attractively valued in a market which is richly valued. The prospects of this segment look bright in the context of the coming merger of PSU banks," he added.