The latest buying follows three consecutive months of heavy selling. FPIs in January raised Rs. 35,962 crore in December, Rs. 22,611 crore and in November Rs. 3,765 crore were withdrawn, according to data from depositories.
Overall, FPIs are expected to draw a net Rs. 1.66 lakh crore (USD 18.9 billion), making it one of the worst periods for foreign inflows. Outflows were triggered by volatile currency movements, global trade tensions, concerns over potential US tariffs and stretched equity valuations.
According to the data, FPIs in February raised Rs. 22,615 crore had been invested. This was the highest monthly inflow since September 2024, when they collected Rs. 57,724 crore had been invested.
The flow was driven by secondary market buying, signaling a renewed outflow of foreign confidence after 2025, said Vinit Bolingkar, head of research at Ventura.
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Javed Khan, senior fundamental analyst at Angel One Limited, said three key catalysts are supporting the flow. These include India-US trade agreements and reforms in India’s market valuation. Additionally, Q3 FY26 earnings grew by 14.7 percent, indicating confidence in the growth narrative.
Echoing similar views, Grove Mutual Fund CEO Varun Gupta attributed the renewed inflows to improving earnings momentum, moderation in valuations from top tiers and early signs of easing trade uncertainty, with India concluding multiple FTAs with the EU and UK.
Sectorally, FPIs were aggressive buyers in financials and capital goods, while maintaining exposure to the IT sector. Amid concerns of AI-led disruption in the segment, Rs. An outflow of 10,956 crores was seen.
VK Vijayakumar, Chief Investment Strategist, Geojit Investments said, “FPIs sold heavily in IT stocks due to anthropic shocks and continued weakness in the segment. However, they turned buyers in financial services and capital goods.”
Looking ahead, Khan said March inflows are expected to remain positive. Q4 earnings will determine whether earnings growth of 15 per cent can be achieved in FY27, while stability below Rs 91 against the dollar puts comfort on returns.
Vijayakumar said FPIs are likely to take a wait-and-see approach before increasing exposure to emerging markets. However, improving GDP growth prospects and a healthy corporate earnings outlook for FY27 bode well for the medium-term outlook.
Meanwhile, the ongoing conflict in the Middle East has fueled risk-on sentiment in financial markets. Its impact on crude prices and currency movements is a key watch, he added.
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