PTI
FPIs Turn Net Buyers in February: Invest Rs 8,100 Cr on US Trade Deal
After three months of significant selling, foreign portfolio investors (FPIs) made a remarkable turnaround in early February, emerging as net buyers and investing over Rs 8,100 crore in Indian equities. This shift is largely attributed to a renewed sense of risk appetite and the positive implications of a trade deal with the United States.
Key Highlights:
– FPI Inflows: Following a period of sustained withdrawals, FPIs injected a cumulative Rs 8,129 crore into the market by February 6.
– Recent Withdrawals: In the preceding months, FPIs faced heavy outflows, with Rs 35,962 crore pulled out in January, Rs 22,611 crore in December, and Rs 3,765 crore in November. Overall, in 2025, the total net withdrawal reached Rs 1.66 lakh crore (USD 18.9 billion) from Indian equities, marking one of the worst phases for foreign investments.
– Driving Factors for FPI Investment:
– Improved risk sentiment
– Stability in domestic interest rates
– Progress in India-US trade discussions
– Optimism surrounding India’s economic growth outlook
Context of the Market Shift
The renewed FPI interest marks a stark contrast to January’s performance, where heightened geopolitical tensions and elevated US bond yields prompted investors to exit the Indian markets. Analysts suggest that the completion of trade discussions between India and the US has significantly diminished geopolitical risks, fueling a market rally.
Expert Insights
– Himanshu Srivastava, principal manager of research at Morningstar Investment Research India, noted that the recent inflows reflect improving confidence in India’s growth trajectory.
– Vaqarjaved Khan, senior fundamental analyst at Angel One, acknowledged that the diplomatic breakthroughs have lessened market uncertainties, thereby contributing to the favorable investment climate, supported by measures from the Union Budget for FY26, which included both fiscal stimulus and sector-specific incentives.
– VK Vijayakumar, chief investment strategist at Geojit Investments, emphasized the role of the appreciating rupee in boosting investor sentiment. Despite temporarily declining from a record low of 90.30 against the dollar to approximately 90.70 by February 6, it is expected to stabilize and potentially appreciate further, encouraging additional FPI inflows.
Future Outlook
Market participants remain cautiously optimistic about the continued inflow potential, which hinges on:
– Sustained momentum in corporate earnings
– Containment of global trade tensions
– Consideration of lingering issues such as rupee volatility and elevated market valuations
In conclusion, as FPIs turn net buyers, the focus on the evolving dynamics from the India-US trade deal has reinvigorated investor confidence, highlighting the importance of global relationships in shaping domestic market conditions. A careful watch on economic indicators and geopolitical landscapes will be crucial in determining future FPI trends.