Daijiworld Media Network - Mumbai
Mumbai, Feb 9: After three consecutive months of heavy selling, foreign portfolio investors (FPIs) turned net buyers in the first week of February, infusing more than Rs 8,100 crore into Indian equities, aided by improving global risk sentiment and progress in India–U.S. trade talks.
The inflows come after sustained withdrawals in recent months. FPIs had pulled out Rs 35,962 crore in January, Rs 22,611 cr in December and Rs 3,765 cr in November, according to data from depositories.
Overall, in 2025 so far, FPIs have withdrawn a net Rs 1.66 lakh crore (about $18.9 billion) from Indian equities, marking one of the worst phases for foreign inflows. The prolonged selling was attributed to volatile currency movements, global trade tensions, concerns over potential U.S. tariffs and stretched equity valuations.
Himanshu Srivastava, principal manager – research at Morningstar Investment Research India, said the recent buying reflects improving risk appetite and renewed confidence in India’s growth outlook. “The sentiment was supported by easing global uncertainties, stability in domestic interest rate expectations, and optimism around India–U.S. trade and policy developments,” he said.
The turnaround stands in sharp contrast to January, when FPIs exited Indian markets amid a global risk-off environment and elevated U.S. bond yields.
Echoing similar views, Vaqarjaved Khan, senior fundamental analyst at Angel One, said the breakthrough in India–U.S. trade talks helped reduce geopolitical uncertainty and fuel a market rally. He added that stabilising U.S. bond yields and supportive measures announced in the Union Budget for FY26, including fiscal stimulus and sector-specific incentives, also boosted sentiment.
VK Vijayakumar, chief investment strategist at Geojit Investments, said the appreciation of the rupee played a key role in improving investor confidence. The rupee had strengthened from a record low of 90.30 against the dollar, though it later weakened to around 90.70 by the close of February 6.
He said the rupee is expected to stabilise and gradually appreciate to below 90 per dollar by the end of March 2026, which could trigger further FPI inflows, depending on global trade dynamics and developments related to artificial intelligence.
Market participants remain cautiously optimistic. Analysts said further inflows could materialise if corporate earnings momentum continues and global trade tensions remain contained, though lingering rupee weakness, elevated valuations and potential shifts in U.S. policy could limit the upside.