The current market rally has successfully drawn foreign investors back to Indian equities this October, with Foreign Portfolio Investors (FPIs) investing over Rs 6,000 crore in the equity market up to this point in the month. Data from the National Securities Depository Limited (NSDL) indicates that FPIs invested Rs 6,480 crore in equities by October 17, following three months of net selling. Previously, FPIs had divested Rs 23,885 crore in September, Rs 34,993 crore in August, and Rs 17,741 crore in July. Market analysts attribute this change in Foreign Institutional Investor (FII) strategy to the closing valuation gap between India and other markets.
They noted that India’s relative underperformance over the past year has created prospects for improved performance in the future. Last week was particularly strong for Indian equities, with benchmark indices reaching 52-week highs. The Nifty increased by 424 points, or 1.68 percent, closing at 25,709.85, while the Sensex surged by 1,451.37 points, or 1.76 percent, settling at 83,952.19. Among sectors, Nifty Realty led the way with a 4.14 percent rise, trailed by Nifty Auto (1.90 percent), Nifty Financial Services (2.59 percent), Nifty FMCG (3.00 percent), Nifty Infra (1.70 percent), and Nifty Consumption (2.73 percent). Analysts noted that easing inflation, robust domestic macro fundamentals, and healthy earnings momentum create a promising medium-term outlook.
The upcoming week features significant events that could serve as major catalysts for investors. The rally is supported by strength in consumption-driven sectors and a broad-based recovery in realty, healthcare, and banking. Investor confidence has been further strengthened by diminishing concerns about asset quality in the financial sector and expectations of better volume growth during the festive quarter.
