Foreign Portfolio Investors (FPIs) turned net buyers in the Indian market, infusing ₹22,615 crore into equities. This marks a significant trend reversal after three consecutive months of heavy selling (November 2025 – January 2026) and represents the highest monthly inflow in 17 months.
Key Investment Highlights
The turnaround was driven by a mix of domestic earnings strength and easing international trade friction.
- Equity Inflow: ₹22,615 crore (Highest since September 2024).
- Debt Inflow: ₹5,380 crore (Reflecting continued interest in Indian fixed-income).
- Total Capital Market Inflow: ₹37,804 crore (Including hybrid and other instruments).
- Trend Reversal: This follows a combined withdrawal of nearly ₹62,300 crore over the previous three months (Dec ’25 and Jan ’26 alone).
Primary Drivers of the Inflow
- Interim India-U.S. Trade Deal: Renewed optimism following trade agreements that helped reduce global tariff uncertainties.
- Valuation Correction: A mid-month dip in Indian benchmarks made valuations more attractive for foreign institutions compared to the “stretched” levels of late 2025.
- Earnings Momentum: Q3 FY26 corporate earnings grew by 14.7%, reinforcing confidence in the “India Growth Story” for the upcoming fiscal year (FY27).
- Free Trade Agreements: Progress on FTAs with the UK and EU further improved sentiment toward India as a stable investment destination.
Sectoral Divergence: Winners & Losers
Foreign investors showed a clear preference for value and infrastructure over high-growth tech:
| Aggressive Buying | Heavy Selling |
| Financial Services: Banks and NBFCs saw the bulk of the inflows. | Information Technology: Offloaded ₹10,956 crore in the first half of Feb alone. |
| Capital Goods: Strong interest in infrastructure and manufacturing. | Reason: The “Anthropic Shock” and fears of AI-led disruption in coding services. |
| Automobiles: Continued interest as EV supply chains stabilized. | Realty: Faced pressure due to rising global interest rate expectations. |
The “March” Outlook
While February was a “record-breaking” month for inflows, analysts (including those from Geojit and Angel One) remain cautious for March due to:
- Geopolitical Risks: The escalating Middle East conflict and its potential impact on crude oil prices.
- Currency Volatility: The Rupee is currently hovering near ₹91 per Dollar, a level being closely monitored by FIIs.
- Q4 Anticipation: Investors are now waiting for Q4 FY26 early indicators to see if the 15% earnings growth target for FY27 remains achievable.
