US–India Deal Sparks ₹19,675 Cr. FPI Inflows In Early Feb

Foreign Portfolio Investors (FPIs) have staged a significant return to Indian equities in early February 2026, after a long period of heavy sell-offs. According to depository data, FPIs pumped ₹19,675 crore into Indian stock markets within the first fortnight of February (up to 13 February). This pump is largely driven by renewed investor confidence that follows the US-India trade deal and easing global macroeconomic pressures.

Also, this rebound follows three consecutive months of net outflows and presents one of the most notable foreign investment shifts in recent times. With inflation data in the US softening and fiscal and trade clarity increasing, what could this turnaround mean for the Indian markets going forward?

What Evidence Shows A Rebound In FPI Flows?

This FPI investment reversed the significant selling seen in recent months: ₹35,962 crore was pulled out in January 2026, ₹22,611 crore in December 2025, and ₹3,765 crore in November 2025. In total, FPIs withdrew a net ₹1.66 lakh crore (approximately USD 18.9 billion) from Indian equities during 2025, marking one of the weakest foreign flow periods in years.

Several patterns underpin this shift:

• FPIs were net buyers on seven of 11 trading sessions in February, up to 13 February, selling on the remaining four.

• Despite the overall positive trend, they still net sold equities worth ₹1,374 crore within the month to that date, largely due to a sharp ₹7,395 crore sell-off on 13 February, when the Nifty 50 declined 336 points.

• A notable drag came from heavy selling in IT stocks, with the IT index falling 8.2% in the week ending 13 February, according to market strategists.

This data collectively illustrates that while sentiment has improved materially, volatility and sector-specific pressures remain factors in FPI activity.

How Much Did Global And Domestic Factors Influence FPI Sentiment?

Analysts attribute the rebound in FPI interest to a combination of global and domestic catalysts, especially the interim US-India trade deal. Strengthened diplomatic and trade ties have eased uncertainty for foreign investors and improved risk appetite for emerging markets.

Global drivers include:

• Softer US inflation data, which supported a more positive rate cycle outlook and stabilised bond yields and the US dollar.

• Easing global macro concerns, including reduced fears of aggressive rate hikes in major economies.

Domestic catalysts were:

• A broadly stable inflation trajectory in India.
• Corporate earnings are largely in line with expectations.
• A supportive Union Budget 2026 with targeted fiscal stimulus and policies.

Key Takeaways

• Treat the FPI inflow as a short-term improvement in sentiment rather than confirmation of a long term trend.

• Consider selective investment in domestic cyclicals and large-cap stocks with stable earnings visibility during market pullbacks, rather than on FPI-driven rallies.

• Maintain a cautious stance on IT and export-oriented sectors until signs of greater clarity appear on US rates, currency trends, and global demand conditions.

• Use market volatility to deploy capital in phases instead of lump-sum investments, given the persistence of sharp single-day flow reversals.

• Increase exposure only if FPI inflows remain consistent over multiple weeks and are accompanied by broad-based sector participation.

Sources

Business Standard

Economic Times

Mint