Foreign Portfolio Investors (FPIs) made a strong comeback to Indian markets after three months of heavy selling. In October 2025, FPIs invested around ₹14,610 crore in Indian equities. This positive shift came after they withdrew money for three straight months — ₹17,700 crore in July, ₹34,990 crore in August, and ₹23,885 crore in September. The sudden return shows renewed confidence in the Indian economy, better market conditions, and improving global factors.
A major part of the money went into the primary market, which includes IPOs and follow-on public offers. FPIs invested about ₹10,708 crore in new listings and public offers, making October the second-highest month for such investments in 2025. This shows strong trust in India’s growing businesses and new companies entering the stock market.
Global financial conditions played a big role in this turnaround. The U.S. Federal Reserve cut interest rates by 25 basis points. This made investors look again at emerging markets like India because lower U.S. rates often push investors to seek better returns in countries with strong growth.
Oil prices also helped India. Brent crude remained in the mid-$60 per barrel range, easing pressure on India’s import bill. The Indian rupee stayed stable, around ₹88.7 per U.S. dollar, which reduced currency-related risks for foreign investors.
On the domestic front, the Reserve Bank of India (RBI) kept the repo rate unchanged at 5.50% in October. The RBI also raised India’s growth forecast for FY26 to 6.8% and predicted inflation at around 2.6%. Inflation in September stood at just 1.54%, the lowest in eight years. Lower inflation and strong growth expectations created a positive environment for investments.
FPIs did not just invest in equities but also increased investments in Indian government bonds. This was mainly because India’s government bonds started getting added to global bond indices, like those introduced by JPMorgan in June 2024. These bonds are expected to gain a 10% weight by March 2025. By late October 2025, foreign investment in government bonds under the Fully Accessible Route (FAR) crossed ₹3.11 trillion.
The government also made changes to make it easier for foreign investors to buy corporate bonds by relaxing some rules. With expectations of lower interest rates and a stable rupee, foreign investors view Indian bonds as a safe and profitable option.
FPIs shifted their focus from defensive sectors like IT, healthcare, and FMCG to sectors linked to growth and demand. The biggest investments were made in financial services, automobiles, metals and mining, energy, and capital goods.
Financial services still hold the highest share of FPI investments. Automobiles gained because of festive season demand and strong consumer purchases. Capital goods performed well due to rising infrastructure spending and private sector investments. Metals and energy sectors attracted interest due to expectations of an industrial recovery.
The Nifty 50 index ended October close to 25,700 points. This happened after a period of ups and downs in the market. The return of FPI investments, along with steady buying by domestic institutions, helped the market recover from its September fall.
This rise in the index indicates that both domestic and foreign investors regained confidence in the strength of India’s economy and corporate earnings.
Several factors will decide whether this momentum continues.
Stable Economy: Low inflation, strong economic growth, and manageable current account deficits are important. With inflation predicted to stay below 4% and growth expected at 6.8%, the economic outlook looks strong.
Corporate Earnings: For the momentum to last, companies must deliver strong earnings. Sectors like banking, automobiles, and capital goods are expected to perform well. If companies show good profits, it will support further investment.
Global Conditions: If global interest rates remain low and oil prices stay in the $60–70 range, then India will likely continue to attract foreign investment. However, if oil prices rise sharply or global central banks raise rates, it could slow down investments.
Even though FPIs have returned strongly, certain risks remain.
India’s stock market is seen as expensive compared to other emerging markets. If earnings or growth disappoints, FPIs may again start withdrawing money. Trade issues, such as higher tariffs from countries like the U.S., could affect exports and the rupee. Sector-specific risks, like changes in visa rules affecting IT companies or healthcare regulations, could also impact investor sentiment.
Global uncertainties like geopolitical tensions, sudden inflation, or changes in U.S. interest rate policy could also affect India’s market performance.
A major strength for India this time is the steady flow of investments into government bonds. This was not the case in earlier years. With India’s inclusion in global bond indices, foreign investments in bonds are expected to remain strong. This provides long-term support to the rupee, reduces borrowing costs, and improves financial stability.
The strong return of FPIs in October 2025 shows renewed trust in India’s economic story. Key reasons include falling inflation, stable currency, lower oil prices, strong growth prospects, and global interest rate cuts. FPIs are investing not only in stocks but also in bonds, which makes this recovery more balanced and durable.
However, for this momentum to continue, India needs stable economic policies, strong corporate earnings, and support from global market conditions. If these factors stay favorable, foreign investments will likely keep flowing. But any shock in oil prices, global interest rates, or company earnings could slow down the trend.
For now, India stands in a strong position, with rising foreign confidence and stable economic conditions supporting its market growth.