Equity Flows Turn Positive As Trade War Tensions Moderate

15 Oct 2025 , 01:09 PM

Last week’s FPI inflows mark a reversal after two weeks of FPI outflows. While Equity (especially IPOs) stood out as the key beneficiary, other asset classes also attracted inflows. Overall, FPI inflows totaled INR 71.7 billion. The bulk of it was directed towards equities – about INR 60.8 billion. Primary market issues accounted for nearly INR 49 billion, and secondary market trades added another INR 12 billion. Debt (INR 5.9 billion), hybrids (INR 3.7 billion) and mutual funds (INR 1.3 billion) witnessed smaller inflows. Last week’s inflow reverses the recent pattern of sizable outflows, including an INR 82 billion outflow two weeks earlier, and signals a renewed appetite for Indian equities amid mitigating trade war concerns.

FPI flows for the week ended 2025-10-10: INR 71.7 billion

FPI flows turned positive last week (week ended 10^th Oct 2025). Overall, net FPI inflows were robust at INR 71.7 billion. These were driven overwhelmingly by equity purchases. Net inflows into equity were INR 60.8 billion, with primary equity inflows accounting for INR 48.75 billion and secondary equity inflows adding INR 12.05 billion. Debt, hybrid and mutual‑fund segments contributed modestly at INR 5.92 billion, INR 3.68 billion and INR 1.32 billion respectively. The strong inflows into primary equity highlights the significant strength of India’s IPO market.

The recent trend in FPI inflows had been sobering. Heightened trade war tensions including the H1B visa restrictions have resulted in worsening of sentiment and outflows from equity markets. For instance, the preceding week witnessed an outflow of INR 2.37 billion. The week before that was a sizeable INR 82.44 billion. As some of these concerns moderated and sentiment improved, the positive sentiment was likely reflected in FII inflows.

Figure: FPI/FII flows for the week ending 2025-10-10

Asset Class	Net Investment (INR Billions)
Foreign Investors Net Investment	71.71
Foreign Investors Debt Net Investment	5.92
Foreign Investors Equity Net Investment	60.8
Foreign Investors Equity Primary Net Investment	48.75
Foreign Investors Equity Secondary Net Investment	12.05
Foreign Investors Mutual Fund Net Investment	1.32
Foreign Investors Hybrid Net Investment	3.68

Source: NSDL

 

Figure: Recent history of FPI flows

Week Ending	Net Investment (INR Billions)
10 Oct, 2025	71.71
03 Oct, 2025	-2.37
24 Sep, 2025	-82.44
19 Sep, 2025	129.4
12 Sep, 2025	27.4
03 Sep, 2025	-17.9
29 Aug, 2025	-210.57
22 Aug, 2025	11.36
14 Aug, 2025	21.08
08 Aug, 2025	-45.96

Source: NSDL

Figure: History of FPI flows

Source: NSDL

FPI flows in Equity for the week ended 2025-10-10: INR 60.0 billion

The week ending 10 October 2025 saw a sharp swing in foreign portfolio investment, with total equity net inflow of INR 60.8 billion, the strongest equity inflows over the past 10 weeks. Primary equity purchases drove the bulk of the inflow, contributing INR 48.7 billion, while secondary market activity added another INR 12 billion. The surge indicates the strength in India’s IPO market.

In contrast, the preceding weeks were dominated by outflows, with net figures ranging from –222.8 billion to –33 billion, and only three modest positive weeks (4.8 billion in the week of 22^nd August and 29.4 billion in the week of 19^th September). Primary inflows have been the main driver equity inflows, while secondary market has routinely seen net outflows. The latest reversal therefore marks a notable short term shift.

Figure: Recent history of FPI flows in equity

Week Ending	FPI Equity	FPI Equity Primary	FPI Equity Secondary
10 Oct, 2025	60.8	48.7	12.0
03 Oct, 2025	-54.3	11.3	-65.6
24 Sep, 2025	-66.3	11.1	-77.4
19 Sep, 2025	29.4	11.5	17.9
12 Sep, 2025	25.0	1.4	23.5
03 Sep, 2025	-32.7	2.3	-35.0
29 Aug, 2025	-222.8	5.0	-227.8
22 Aug, 2025	4.8	7.4	-2.6
14 Aug, 2025	-70.9	13.8	-84.6
08 Aug, 2025	-75.0	14.4	-89.4

Source: NSDL

Figure: History of FPI flows in equity

Source: NSDL

 

FPI flows in Debt for the week ended 2025-10-10: INR 5.9 billion

The latest weekly data shows a modest net FII debt inflow of INR 5.92 billion, indicating a positive but restrained appetite for Indian debt markets. This figure is a sharp drop from the robust INR 50.32 billion inflow recorded in the earlier week and is well below the peaks of INR 96.22 billion and INR 90.02 billion witnessed in some of the earlier weeks. The modest positive balance follows a brief outflow of INR 10.57 billion two weeks ago.

The subdued flow likely reflects the stronger preference for equity as geopolitical sentiment improved. Conversely, the earlier strong inflows were driven by renewed interest in sovereign bonds amid expectations of stable yields and a relatively attractive yield spread versus developed markets.

 

Figure: Recent history of FPI flows in debt

Week Ending	Net Investment (INR Billions)
10 Oct, 2025	5.9
03 Oct, 2025	50.3
24 Sep, 2025	-10.6
19 Sep, 2025	96.2
12 Sep, 2025	2.4
03 Sep, 2025	22.9
29 Aug, 2025	10.5
22 Aug, 2025	6.7
14 Aug, 2025	90.0
08 Aug, 2025	13.9

Source: NSDL

Figure: History of FPI flows in debt

Source: NSDL