After three consecutive months of heavy selling, Foreign Institutional Investors (FIIs) officially turned net buyers in the first week of February 2026. According to NSDL and exchange data, FIIs/FPIs infused ₹8,129 crore into Indian equities between February 1 and February 6, 2026.
This reversal in sentiment follows a massive outflow of ₹35,962 crore in January 2026 and marks a significant turning point for the Indian markets as they enter the new fiscal year.
1. Key Drivers of the Inflow
The sudden return of foreign capital was primarily fueled by three major catalysts:
- The India-US Trade Deal: The announcement of the landmark trade pact—which slashes US tariffs on Indian exports from 50% to 18%—removed a significant “geopolitical overhang.” Analysts noted that this deal has replaced “geopolitical fear” with “policy certainty.”
- Stabilizing Currency: The Indian Rupee showed signs of recovery, moving away from its record low of 90.30 toward the 90.00 mark. A strengthening rupee improves dollar-denominated returns for foreign investors, encouraging them to increase allocations.
- Positive Q3 Earnings: Record-breaking profits from heavyweights like SBI (₹21,028 crore) and Tata Steel (722% PAT surge) reinforced the “India Growth Story” and highlighted the resilience of domestic corporate earnings.
2. Weekly Inflow Breakdown (February 2026)
The buying was concentrated in the middle of the week following the trade deal announcement, overcoming the initial “budget day” jitters.
| Date (Feb 2026) | Net Investment (₹ Crore) | Market Sentiment |
| Feb 2 (Monday) | + ₹1,906 | Initial post-deal optimism. |
| Feb 3 (Tuesday) | + ₹5,426 | Single biggest buying day since Oct 2025. |
| Feb 4 (Wednesday) | + ₹30 | Consolidation phase. |
| Feb 5 (Thursday) | – ₹1,693 | Minor profit booking. |
| Feb 6 (Friday) | + ₹1,951 | Strong weekend accumulation. |
| Total (1st Week) | ~ ₹8,129 | Net Buyer Status |
3. Strategic Shift: Large-Caps in Focus
FIIs have been highly selective in their return, focusing on the most liquid and fairly valued segments of the market:
- Banking & Finance: Large-cap banking leaders like SBI and Kotak Bank saw the highest interest as their Q3 results confirmed strong credit growth and a decade-low NPA profile.
- IT & Capital Goods: Export-oriented sectors are being “rerated” by foreign desks due to the improved market access and tariff certainty provided by the US trade deal.
- Telecom: Blue-chip telecom players also attracted nibbling from foreign funds as the sector’s debt-overhang began to clear.
4. Comparative Context
The ₹8,100+ crore inflow is a stark contrast to the historical selling pressure witnessed throughout 2025.
- 2025 Record Outflow: For the full year 2025, FPIs pulled out a net ₹1.66 lakh crore ($18.9 billion) from Indian equities, making it one of the worst years on record for foreign participation.
- January 2026: Just last month, FIIs exited ₹35,962 crore worth of shares due to elevated US bond yields and global risk-off sentiment.
- Current Status: If this trend sustains, February 2026 will be the first month of net foreign inflows into Indian equity since October 2025.
Conclusion: A “Selective” Return
While the ₹8,129 crore inflow is a massive psychological boost for Dalal Street, market participants remain “cautiously optimistic.” Experts warn that for a broad-based rally, this selective “nibbling” in large-caps must transform into sustained buying across broader indices. However, with the India-US trade deal signed and the rupee stabilizing, the path for FIIs to “re-enter” India is now clearer than it has been in seven months.
