Foreign Investors Pour $1.6 Billion into Indian Stocks, Biggest Inflow in Nearly Six Years

MUMBAI, Nov 5: Indian equity markets witnessed a major turnaround on Thursday as foreign investors made their largest single day purchase of domestic stocks in nearly six years, investing approximately $1.6 billion amid easing crude oil prices and changing global investment trends.

According to provisional stock exchange data, overseas investors purchased shares worth Rs 14,796 crore on November 5, marking their biggest daily net investment since February 24, 2021. The latest buying activity reflected improving confidence in Indian financial markets following a prolonged period of foreign fund withdrawals.

The renewed interest came after international oil prices declined sharply, reducing concerns over inflation, import expenditure and India’s broader economic outlook. As one of the world’s major crude oil importers, India remains particularly vulnerable to fluctuations in global energy prices. Lower oil prices are generally considered favourable for the country’s external balance, currency stability and corporate profitability.

The latest investment activity also coincided with a broader reassessment of global portfolios, particularly investments linked to artificial intelligence companies. Concerns surrounding elevated valuations and the sustainability of heavy spending on AI infrastructure prompted international investors to reconsider their exposure to technology-heavy markets.

India, which has relatively limited representation in major AI-focused stock market segments, emerged as an alternative destination for some global funds seeking opportunities beyond the crowded technology trade.

The latest purchases represented a significant reversal from the earlier trend. Foreign investors had withdrawn a record $30 billion from Indian equities through October, putting pressure on domestic markets and weakening India’s performance compared with several emerging-market competitors.

However, the situation began changing during the final days of the previous week. Overseas investors purchased Indian shares worth Rs 20,835 crore, equivalent to approximately $2.20 billion, over five consecutive trading sessions.

Market participants attributed the improvement to a combination of relatively attractive valuations, improving corporate earnings expectations and lower foreign ownership in Indian companies.

Anand Gupta, lead portfolio manager for India equity at Allianz Global Investors, said accelerating earnings, below-average valuations and limited foreign ownership made Indian equities an attractive investment opportunity.

The positive sentiment was reflected in benchmark indices on Thursday. The Nifty 50 advanced 2.4 per cent to close at 24,536.60, while the BSE Sensex gained an identical 2.4 per cent to settle at 79,310.01.

Both indices had registered gains of more than eight per cent over six trading sessions, recording their longest winning streak in approximately a year. The rally also helped Indian equities narrow their performance gap with other emerging markets.

The improvement in domestic shares came against the backdrop of changing international economic and political conditions. The outcome of the US midterm elections contributed to expectations of a potentially more measured approach towards international trade and tariffs, while a weaker US dollar and easing American Treasury yields provided additional support to emerging-market assets.

Siddhartha Khemka, head of research for wealth management at Motilal Oswal Financial Services, said the election outcome had improved global investor sentiment. Expectations of a softer approach towards trade-related issues, alongside favourable currency and bond market movements, were supporting equities.

The strengthening of the Indian rupee also added to the positive market environment. A decline in crude oil prices can reduce the country’s import bill and ease pressure on the domestic currency, particularly when accompanied by foreign investment inflows.

A stronger rupee can also improve the investment outlook for overseas funds by reducing concerns about currency-related losses when converting their investments back into foreign currencies.

For Indian companies, lower energy costs could provide relief to sectors with significant exposure to imported fuel and petroleum-based raw materials. Industries such as aviation, paints, chemicals, transportation and manufacturing could benefit if lower crude prices are sustained.

The banking and financial services sectors may also receive support from improving economic sentiment, although the overall impact will depend on credit growth, asset quality and interest rate conditions.

However, analysts caution that the recent improvement should not automatically be interpreted as a permanent reversal in foreign investment trends. Global investors continue to monitor geopolitical developments, energy prices, international monetary policy and corporate earnings before making long-term allocation decisions.

On Friday, November 6, Indian shares continued to outperform several Asian markets. The Nifty 50 rose 0.51 per cent to 24,662.80, while the Sensex gained 0.76 per cent to 79,917.60 by 10:33 am IST.

The relative resilience was notable as South Korea’s Kospi declined around eight per cent and Japan’s Nikkei dropped five per cent amid renewed concerns over technology and artificial intelligence investments.

The performance suggested that foreign inflows and India’s comparatively limited exposure to the latest AI-related market sell-off were providing support to domestic equities.

Going forward, investors are likely to focus on corporate earnings, crude oil movements, foreign fund activity and international trade developments to determine whether the recent recovery can be sustained.

For the Indian market, continued overseas investment could provide an important source of support, although stability in global economic conditions will remain essential for maintaining investor confidence.