Foreign investors pump over $2 billion into Indian equities in 10 days

The sustained interest comes amid Jio Platforms' record listing on 28th October, which drove nearly half the buying for the 10 day period, at $1.1 billion. The stock listed at Rs 1,358 per share, a premium of 21.4% to its issue price, and closed the session at Rs 1,419 apiece. Further, the global artificial intelligence (AI) trade is continuing to show cracks. Global indices with a heavy concentration in AI and semiconductor-related stocks such as the Nasdaq, Kospi and Taipex have seen a significant sell-off, falling up to 3.5% during a single session, with megacaps such as Samsung, Alphabet, and Intel crashing 50% over the past month.

India's domestic, traditional market has been seen as an anti-AI trade, which has contributed to the appeal during a time where these stocks are seeing crashes. For the month of October, the domestic benchmarks gained 2%, outperforming other emerging markets. Brent crude has also weakened to $104 per barrel, lower from $115/bbl. The Federal Reserve also decided to hold rates at 3.75–4.00% during the previous week, with the Chair Kevin Warsh's commentary less hawkish than previously expected.

As a result, the 10-year US yield also softened to 5.0%. On the domestic front, the Indian rupee has been relatively stable after the central bank decided to introduce measures to bring stability to the currency. Additionally, chatter of a possible rejig in long-term capital gains for foreign institutional investors has bolstered sentiment. According to JM Financial, the current FPI sell-off spanning FY2025, FY2026, and FY2027 is the deepest yet.

Since July 2022, foreign investors have net sold $51.5 billion in the secondary markets, while buying $36.3 billion in primary issues and other off-market deals. Over the last 12 months, secondary flows are $39 billion and primary flows are $9.2 billion. As a result of the sell-off, India’s weight in the MSCI EM index has nearly halved. It fell from a peak of 20.0% in July 2024 to 10.7% in September 2026.

A lower weight means benchmark-driven funds need to hold less India for the same emerging markets mandate, which lowers the structural flow. Going ahead, the reversal in FII flows is an encouraging signal for sentiment, though elevated crude and global event risk could temper the momentum. Market participants will closely track the outcome of the US midterm elections in the coming week. "Additionally, movements in Brent crude prices, developments in the US-Iran and Russia-Ukraine conflicts, and ongoing quarterly earnings announcements will remain key factors influencing investor sentiment," Pabitro Mukherjee, Deputy Vice President-Research, Bajaj Broking said.