FPIs Pump ₹8,100 Crore As US Trade Deal Boosts Sentiment

The foreign portfolio investors (FPIs) who had been net sellers of Indian equities in the past three months were now making purchases of Indian equities in large volumes in the first week of February 2026. This was a significant change in the behaviour of overseas investors who had recorded massive outflows over a long period.

FPI Flows: Sharp Reversal From Recent Months

In the first week of February alone, FPIs turned net buyers with inflows of approximately ₹8,129 crore into Indian equities.

This flow came after FPIs were net sellers for three consecutive months:

• November 2025: Net outflows of ₹3,765 crore

• December 2025: Net outflows of ₹22,611 crore

• January 2026: Net outflows of ₹35,962 crore

On the whole, FPIs withdrew a net ₹1.66 lakh crore (approximately USD 18.9 billion) of Indian equities in 2025, one of the poorest years of foreign flows in recent times.

The selling was attributed by analysts to several factors, such as the fluctuating currency, tensions in global trade, fears of potential US tariffs, and overvalued equity, which all reduced the appetite of foreign investors.

What’s Driving The Fresh FPI Buying?

Analysts hold that the revival of foreign inflows is a sign of confidence in the growth prospects of India, which is enabled by a conglomerate of diminishing global uncertainty, policy optimism, and currency stability.

1. Improving Risk Appetite And Policy Optimism

As per Himanshu Srivastava, principal manager-research at Morningstar Investment Research India, the buying trend indicates a return of risk appetite among foreign investors. He observed that sentiment has improved because of a reduction in global uncertainties, stable domestic interest rate expectations, and optimism concerning India-US trade and wider policy progress.

2. India-US Trade Progress And Budget Support

Vaqarjaved Khan, a senior fundamental analyst at Angel One, said progress in India-US trade talks helped reduce geopolitical uncertainty, supporting a market rally.

He also included that the stabilisation of the US bond yields and supportive actions announced in the Union Budget FY26, which included fiscal stimulus and incentives specific to the sector, also increased investor confidence.

This combination of improving global cues and domestic policy support appears to have encouraged foreign investors to return to Indian equities.

3. Rupee Strengthening Adds To Sentiment

VK Vijayakumar, chief investment strategist at Geojit Investments, said the rupee’s appreciation also played an important role in improving sentiment.

The rupee strengthened from a record low of ₹90.30 against the dollar, although it later weakened to around ₹90.70 by the close of February .

He expects the rupee to stabilise and gradually strengthen to below ₹90 per dollar by end-March 2026, which could support further FPI inflows.

However, he cautioned that the trend will depend on evolving global trade developments and AI-related market shifts.

What Does This Mean For Investors?

The change of FPIs to net buyers instead of sellers is an indication of a possible inflection point in foreign investments in Indian equity.

Following months of intense selling pressure, which burdened market valuations and market sentiment, new inflows have the potential to boost broader market indices and confidence in the mid-cap and large-cap market segments.

The persistence of foreign demand can contribute to taming the volatility and further market penetration, especially once the trend in corporate earnings and international risk-taking is conducive.

Nevertheless, investors need to monitor the continued existence of this purchasing pattern because this is still subject to rupee movement, global bond yields, and additional transparency on the progress of trade between India and the US.

This steady stream could bolster confidence in the large-cap markets. Conversely, a reversal could reintroduce volatility to riskier assets.

Sources:

Economic Times

Business Standard