Foreign investors have shown renewed interest in Indian markets this month, with the primary market continuing to offer a reliable avenue for profit, analysts
noted on Sunday. The declining trend in foreign institutional investor (FII) selling, which began in early October, has persisted, reflecting growing confidence in Indian equities, according IANS report. During October, FIIs turned net buyers on multiple days, and cumulative selling through exchanges up to October 25 was minimal, at Rs 3,363 crore, according to NSDL data. “The long-term trend of FIIs continuously buying/investing through the primary market continued in October, too, with a total investment of Rs 10,692 crore (up to October 25). Investing through the primary market has been a steady source of profit for the FIIs and, therefore, this trend is likely to continue,” said VK Vijayakumar, Chief Investment Strategist, Geojit Investments Ltd. However, on Thursday, FIIs turned net sellers with outflows of Rs 1,166 crore after five consecutive days of buying, signalling short-term profit booking. Domestic institutional investors (DIIs) provided support, contributing net inflows of Rs 3,893 crore. Positive Market Drivers Siddhartha Khemka, Head of Research, Wealth Management, Motilal Oswal Financial Services Ltd., said, “FII inflows and upbeat management commentaries could help sustain positive market momentum, though intermittent profit booking cannot be ruled out. Meanwhile, any progress on the India-US trade deal front could further uplift investor sentiments,” added the report. Analysts point out several reasons FIIs may continue to invest in India. First, the valuation gap between India and other markets has narrowed, reducing incentives to move funds elsewhere. Second, earnings growth in India is gradually improving and expected to gain momentum in FY27. Consumption, Trade Deals, And Future Outlook Vijayakumar added, “Three, the Diwali sales this year across a large number of goods are an all-time high indicating a resilient economy and robust consumption. Four, there are indications of a trade deal between India and the US, which can substantially improve market sentiments.” These factors are expected to encourage FIIs to maintain buying in Indian markets. Nonetheless, analysts caution that at higher levels, FIIs may resume selling, potentially limiting a prolonged market rally.
