Mumbai: After three months of heavy selling, Foreign Portfolio Investors (FPIs) have returned to the Indian equity market. In the first week of February, FPIs invested more than Rs 8,100 crore in Indian stocks, signaling a sharp improvement in market sentiment.
Experts say the key reasons behind this turnaround are rising risk appetite, easing global concerns and positive signals from the India–US trade deal.
Massive Outflows in Recent Months
Depository data shows that FPIs were net sellers for three straight months before this rebound. In January, they pulled out Rs 35,962 crore, followed by Rs 22,611 crore in December and Rs 3,765 crore in November.
Overall, in 2025, FPIs have withdrawn Rs 1.66 lakh crore, or about USD 18.9 billion, from Indian equities. This period is considered one of the worst phases for foreign investment in recent years.
Why FPIs Were Selling Earlier
Analysts point out several reasons for the prolonged selling:
- Volatile currency movements
- Global trade tensions
- Concerns over possible US tariffs
- High stock market valuations
However, the situation began to improve at the start of February.
Rs 8,129 Crore Invested Till February 6
According to data, FPIs invested Rs 8,129 crore in Indian equities up to February 6. Himanshu Srivastava, Principal Manager at Morningstar Investment Research India, said this buying reflects growing confidence in India’s growth outlook.
He added that lower global uncertainty, stable domestic interest rates and positive developments in India–US trade and policy matters helped lift investor sentiment.
Support From Bond Yields and Budget
Vaqarjaved Khan, Senior Fundamental Analyst at Angel One, said a breakthrough in India–US trade talks reduced geopolitical risks and boosted markets. He also highlighted that stable US bond yields and fiscal stimulus and sector-specific incentives announced in the Union Budget FY26 supported the rally.
Rupee Strength Adds to Optimism
Geojit Investments’ Chief Investment Strategist V.K. Vijayakumar said the strengthening of the rupee also played a key role. The rupee recovered from its record low of 90.30 per dollar, though it later settled near 90.70 by February 6.
He believes the rupee could strengthen further and stay below 90 per dollar by March 2026, which may attract more FPI inflows going ahead.
