FPIs become net buyers in February; invest Rs 8,100 cr in a week in US trade deal

After three consecutive months of heavy selling, foreign portfolio investors (FPIs) turned net buyers in the first week of February, bringing in over Rs 8,100 crore of Indian equities, helped by improving risk sentiment and a trade deal with the US.The inflows follow sustained withdrawals in recent months, with FPIs withdrawing Rs 35,962 crore in January, Rs 22,611 crore in December and Rs 3,765 crore in November, depository institution data showed.

Overall, FPIs extracted a net Rs 1.66 lakh crore (USD 18.9 billion) from Indian equities in 2025, marking one of the worst periods for foreign flows. The selling was driven by volatile currency movements, global trade tensions, concerns about possible US tariffs and high stock valuations.According to the data, FPIs invested Rs 8,129 crore this month (till February 6).

Himanshu Srivastava, chief manager research at Morningstar Investment Research India, said the recent purchase reflects improved risk appetite and renewed confidence in India’s growth prospects.

“Sentiment was supported by easing global uncertainties, stability in domestic interest rate expectations and optimism over trade and policy developments between India and the US,” he added.

The reversal is in stark contrast to the outflows in January, when FPIs exited Indian markets amid a global risk environment and high US bond yields. Echoing similar views, Vaqarjaved Khan, senior fundamental analyst at Angel One, said the breakthrough in India-US trade talks has helped reduce geopolitical uncertainty and fuel a market recovery, besides stabilizing US interest rates and supporting measures announced in the Union Budget for FY26, including fiscal stimulus and sector-specific stimulus measures.

VK Vijayakumar, chief investment strategist at Geojit Investments, said the rupee appreciation also played a key role in improving sentiment. The rupee strengthened from a low of 90.30 against the dollar, although it later weakened to around 90.70 on February 6.

He said the rupee is expected to stabilize and gradually appreciate below 90 per dollar by end-March 2026, which could lead to additional FPI inflows, although the outcomes will depend on how global trade and artificial intelligence developments evolve.

Market participants remain cautiously optimistic. Further inflows could occur if corporate earnings momentum continues and global trade tensions remain contained, although continued rupee weakness, high valuations and possible shifts in US policy could limit the upside, Khan said.