In New Delhi, analysts noted on Saturday that with the valuation gap narrowing and Indian earnings expected to improve in FY27, foreign portfolio investors (FPIs) may reduce their selling activities moving forward. September saw continued FPI selling, amounting to Rs27,163 crore through exchanges. However, maintaining the long-term trend of primary market purchases, FPIs acquired equities worth Rs3,278 crore during the same month. The September sales bring the total for 2025 to Rs198,103 crore, adding to the Rs121,210 crore sold in 2024, resulting in a cumulative FII selling of Rs319,313 crore over the past 21 months, as stated by Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Ltd.
The primary reasons for this strategy include higher valuations in India compared to lower valuations elsewhere. Analysts suggest that the market enters the new week with cautious optimism, aided by the RBI’s supportive policy and robust GST collections. However, investors should be mindful of potential volatility due to FII outflows and global challenges. It is advisable to monitor Q2 earnings closely, especially from major IT and banking firms, for insights into sector leadership. A buy-on-dips approach is recommended, focusing on domestic cyclicals such as metals, automobiles, financials, and defence, while selectively engaging with other sectors.