The intensity of foreign portfolio investor (FPI) selling in the Indian markets slowed down significantly in October, analysts said on Sunday.
The shift in the FPI trading strategy is significant and it stems from two factors.
One, the valuation differentials between India and other markets, which were high earlier, had come down significantly in recent weeks following the rally in other markets and consolidation in the Indian market.
“Two, the growth and earnings prospects for India have been revised upward by market experts. The GST cuts and the low interest regime are expected to boost India Inc’s earnings in FY27, which the market will soon start discounting,” said Dr VK Vijayakumar, Chief Investment Strategist, Geojit Investments Ltd.
Foreign investors turned buyers in the cash market on the last four trading sessions of the week ended on October 10.
The cash market buy figure during the last four trading sessions stands at Rs 3,289 crore.
The global market sentiment has again turned negative with the reignite of the US-China trade war, following US President Donald Trump’s threat to impose 100 per cent tariff on imports from China and restricting many critical US exports to China.
The FPI flows, going forward, will depend on how this renewed trade war pans out in the coming days, said analysts.
Siddhartha Khemka, Head of Research, Wealth Management, Motilal Oswal Financial Services Ltd, said Nifty50 edged higher by 104 points to close at 25,285 last Friday, amid improving global sentiment, supported by easing geopolitical tensions as Israel and Hamas agreed on the first stage of a ceasefire plan, along with signs of progress in a potential India–US trade deal.
“Renewed FPI buying also boosted sentiment. Additionally, India and the UK announced multiple collaborations across sectors including education, critical minerals, climate change, and defence,” he mentioned.
With the valuation differential coming down and Indian earnings likely to improve in FY27, foreign portfolio investors (FPIs) are likely to slow down selling going forward.
Sustained FPI selling continued in September with the sell figure through exchanges touching Rs 27,163 crore. However, in keeping with the long-term trend of buying through the primary market, they bought equity for Rs 3,278 crore in September.
On the macro front, investors will closely track India’s retail inflation print for September, to be released on Monday.
