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Foreign institutional investors (FIIs) have resumed buying in Indian equities this month, signalling renewed confidence in the country’s growth outlook. Reported by IANS, steady inflows into the primary market and expectations of progress on an India–US trade agreement are likely to further support market sentiment in the weeks ahead.

After months of volatility and sustained selling, FIIs turned net buyers on several days in October. Data from the National Securities Depository Limited (NSDL) showed that total FII selling through exchanges, up to October 25, stood at a modest Rs 3,363 crore. Analysts believe the shift reflects improving global sentiment towards India.

“The long-term trend of FIIs investing through the primary market continued in October, with a total investment of Rs 10,692 crore. This has been a consistent source of profit for FIIs, and the pattern is expected to sustain,” said Dr V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

While FIIs booked profits after five straight sessions of buying - turning net sellers worth Rs 1,166 crore on Thursday, October 26, domestic institutional investors (DIIs) continued to provide strong support. DIIs recorded net inflows of Rs 3,893 crore.

“FII inflows and encouraging corporate commentaries could help maintain market momentum, though intermittent profit-taking cannot be ruled out. Any positive movement on the India-US trade deal front could further boost investor confidence,” said Siddhartha Khemka, Head of Research (Wealth Management) at Motilal Oswal Financial Services.

Experts point to several factors driving the return of foreign investors. The valuation gap between Indian equities and other emerging markets has narrowed, making India relatively more attractive. At the same time, corporate earnings growth is gradually improving and expected to strengthen further in FY27. “The Diwali sales this year across a wide range of products have hit record levels, reflecting resilient consumption and economic stability,” Dr Vijayakumar noted. “Additionally, early indications of progress on a potential India-US trade agreement have improved market sentiment.”

Market analysts expect the ongoing momentum to continue in the near term, supported by steady domestic inflows, festive demand and global interest in India’s growth story. However, they also caution that a sustained rally could face resistance at higher levels as investors look to book profits.

Ankit Kumar is a Senior Sub Editor at Zee Business. He covers international affairs, politics, climate change, business, finance and global elections. With experience acros