Mumbai, October 31: After ten long weeks of selling, foreign investors are finally buying Indian shares again. Foreign institutional investors (FIIs) pumped a net Rs 6,305 crore into Indian equities this week, ending a selling streak that had drained sentiment on Dalal Street since late August. The turnaround helped both benchmark indices close the week firmly in the green, with the Nifty reclaiming the 23,000 mark on Friday.
The Sensex rose 308.49 points, or 0.42 percent, to settle at 74,459.53 on Friday, while the Nifty gained 116.35 points, or 0.51 percent, to end at 23,053.10. For the week as a whole, the Sensex jumped 1,335.7 points (1.82 percent) and the Nifty added 453.1 points (2 percent), recovering most of the previous week’s losses.
A reversal, not yet a trend
FIIs were net buyers in three of the last five trading sessions, according to market data reported on Saturday. The buying marks a sharp break from the pattern of the past two and a half months, during which foreign funds sold relentlessly. For October as a whole, FII net selling still stands at Rs 45,162 crore, the largest monthly outflow since June, so one week of buying does not erase the damage.
Domestic institutional investors (DIIs) continued to support the market for an eleventh consecutive week, though their buying slowed to Rs 3,110 crore from Rs 10,942 crore in the previous week as domestic funds booked profits into the rally. Their cumulative purchases for October stand at Rs 62,220 crore, a cushion that has kept the market from falling further during the foreign selloff.
Analysts quoted in market coverage called the FII reversal an encouraging signal for sentiment, but cautioned that elevated crude prices and global event risks could still temper the momentum.
What drove the rebound
Two things helped sentiment this week. First, the US Federal Reserve left interest rates unchanged, easing fears of tighter global liquidity. Second, quarterly earnings from several large companies came in better than feared, giving domestic buyers a reason to step in.
Information technology stocks led Friday’s gains. The Nifty IT index rose 2.5 percent, with Infosys climbing 3.37 percent, while pharmaceutical shares advanced 1.7 percent. Consumer durables, energy and media stocks declined more than 1 percent each, a reminder that the recovery is far from broad-based.
For October as a whole, the Sensex gained 2.7 percent and the Nifty rose nearly 2 percent, snapping a two-month losing streak. The benchmarks had fallen 5.82 percent and 6.06 percent respectively in September, after declines of 1.46 percent and 1.24 percent in August. The broader market tells a different story, though: the Nifty Midcap 150 fell 3.7 percent in October and the smallcap index dropped 5.5 percent, and on Friday both midcap and smallcap indices slipped again even as the benchmarks rose.
The risks that still hang over the market
Three risks will decide whether the FII return lasts:
- Crude oil: Brent crude stayed above 116 dollars a barrel on Friday, up almost 14 percent in October. Costlier oil widens India’s import bill and pressures the rupee.
- The rupee: The currency snapped a two-session losing streak on Friday, closing at 94.95 against the US dollar compared with 95.25 on Thursday, but it remains under strain from sustained foreign outflows.
- Global events: Traders will closely track the outcome of the US midterm elections in the coming week, along with developments in the US-Iran and Russia-Ukraine conflicts and the remaining quarterly earnings announcements.
One brokerage cited in market coverage has trimmed its December target for the Nifty to 25,000 from 26,000, arguing that a cut in long-term capital gains tax alone cannot trigger sustained foreign inflows.
What investors should watch next week
With markets closed for the weekend, attention shifts to Monday’s open. If FIIs buy for a second straight week, confidence will build quickly. If they slip back to selling, this week’s rally may be remembered as a relief bounce inside a longer downturn.
For retail investors, the lesson of October is familiar: the benchmarks can recover while smaller stocks keep falling, and a single strong week does not make a trend. Staying diversified and watching crude and currency moves remains sensible while global uncertainty stays high.
FAQs
How much did FIIs buy this week?
FIIs net bought Rs 6,305 crore worth of Indian equities during the week, ending a ten-week selling streak.
Where did the Sensex and Nifty close on Friday?
The Sensex settled at 74,459.53, up 308.49 points, and the Nifty closed at 23,053.10, up 116.35 points.
How did the indices perform in October?
The Sensex gained 2.7 percent and the Nifty rose nearly 2 percent in October, snapping a two-month losing streak, though midcap and smallcap indices ended the month lower.
What are DIIs doing?
Domestic institutional investors bought for an eleventh straight week, adding Rs 3,110 crore this week and Rs 62,220 crore in October so far.
What could spoil the recovery?
Crude above 116 dollars a barrel, pressure on the rupee, and global risks including the US midterm elections and West Asia tensions are the key threats to watch.
Markets will reopen on Monday, and the first flow numbers of the new week will show whether foreign investors are truly back, or just passing through.
