Overall, FPIs have withdrawn a net Rs 1.66 lakh crore (USD 18.9 billion) from Indian equities in 2025, making this one of the worst periods for foreign flows. The outflows were driven by volatile currency movements, global trade tensions, concerns about possible US tariffs and high stock valuations.According to the data, FPIs invested Rs 22,615 crore in February. This was the highest monthly inflow since September 2024, when they had invested Rs 57,724 crore.
The inflows were driven by secondary market purchases, pointing to renewed foreign confidence after 2025, said Vinit Bolinjkar, head of research at Ventura.
Javed Khan, Senior Fundamental Analyst at Angel One Ltd, said three key catalysts supported the inflows. These include trade agreements between India and the US and corrections in Indian market valuation. Moreover, earnings rose 14.7 percent in the third quarter of 2026, indicating confidence in the growth story.
Echoing similar views, Varun Gupta, CEO of Groww Mutual Fund, attributed the renewed inflows to improving earnings momentum, moderation in valuations from peak levels and early signs of easing trade uncertainty, with India inking multiple FTAs, including those with the EU and the UK. Sector-wise, FPIs have been aggressive buyers of financial services and capital goods, while continuing to limit exposure to the IT sector. The segment saw an outflow of Rs 10,956 crore due to concerns over AI-induced disruption.
“FPIs had sold off a lot of IT stocks due to the anthropic shock and continued weakness in the segment. However, they turned into buyers in financial services and capital goods,” said VK Vijayakumar, Chief Investment Strategist at Geojit Investments.
Looking ahead, Khan said flows are expected to remain positive in March. Fourth quarter earnings will determine whether 15 per cent earnings growth in FY27 is achievable, while stability of the rupee below Rs 91 per dollar will provide comfort on returns.
Vijayakumar said FPIs are likely to adopt a wait-and-see approach before increasing their exposure to emerging markets. However, the improving outlook for GDP growth and healthy corporate profits for fiscal year 2027 bodes well for capital flows in the medium term.
Meanwhile, the ongoing conflict in the Middle East has led to risky sentiment in the financial markets. Its impact on crude oil prices and currency movements remains an important factor to monitor, he added.
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