Foreign Investors Return: Rs 6,480 Crore Boost Fuels India’s Market Rally in October

Published on October 20, 2025

Table of Contents

• Foreign Investors Make a Comeback
• Market Rally Drives Fresh Interest
• Macroeconomic Tailwinds Support Revival
• Sectoral Performance and Investor Sentiment
• Outlook for the Coming Months

Foreign Investors Make a Comeback

After a three-month streak of withdrawals, foreign portfolio investors (FPIs) have made a resounding return to Indian equities, investing approximately Rs 6,480 crore in October 2025. This shift follows heavy outflows of Rs 23,885 crore in September, Rs 34,990 crore in August, and Rs 17,700 crore in July, as reported by the NSDL. The renewed inflows highlight a major turnaround in investor sentiment and confidence in India’s long-term growth potential.

Market Rally Drives Fresh Interest

Indian markets have maintained their bullish momentum, with the Sensex surging 1,451 points to close at 83,952.19 and the Nifty 50 advancing 424 points to 25,709.85. Both indices reached new 52-week highs, reflecting strong buying interest across sectors. Market experts attribute this renewed investor enthusiasm to narrower valuation gaps and improved relative performance compared to global peers. Analysts such as VK Vijayakumar from Geojit Investments note that India’s earlier underperformance has now created value-based entry opportunities for foreign funds.

Macroeconomic Tailwinds Support Revival

Strong macroeconomic fundamentals are bolstering the ongoing rally. According to Himanshu Srivastava of Morningstar India, stable GDP growth, controlled inflation, and robust domestic demand continue to make India a preferred destination among emerging markets. Expectations of US interest rate cuts have further eased global liquidity pressures. The Reserve Bank of India’s decision to maintain the repo rate at 5.5% while projecting lower inflation for FY26 has also strengthened market optimism.

Sectoral Performance and Investor Sentiment

Several sectors led the rally in October, with Nifty Realty rising 4.14%, Nifty FMCG up 3.00%, and Nifty Financial Services gaining 2.59%. Market watchers note increasing confidence in consumption-driven sectors amid festive demand and improved credit growth in banking. Analysts suggest that easing inflation and resilient corporate performance provide a strong outlook for continued FPI participation in the short term.

Outlook for the Coming Months

Despite the encouraging October inflows, FPIs remain net sellers in the broader 2025 fiscal year, exiting around Rs 1.5 lakh crore overall. However, experts forecast further inflows as global risk appetite improves and India’s earnings season picks up pace. With major firms like Reliance Industries, HDFC Bank, and ICICI Bank announcing quarterly results this month, foreign investors are expected to monitor performance closely before scaling up positions.

In summary, October’s FPI resurgence signals renewed confidence in India’s economic resilience and market prospects. As structural reforms, fiscal discipline, and corporate earnings momentum strengthen, foreign inflows could continue to support India’s equity markets in the months ahead.