February sees massive FPI inflow | Is India back on Foreign Investors’ radar?

Mumbai: Foreign portfolio investors (FPIs) made a strong return to Indian equities in February, injecting Rs 22,615 crore into the market — the highest monthly inflow in the past 17 months. This comes after three consecutive months of heavy selling, signalling renewed investor confidence.

The rebound was driven by positive developments including the interim India‑US trade deal, a correction in domestic market valuations, and robust third-quarter corporate earnings. These factors helped reverse the trend of recent outflows and attracted fresh foreign investment.

Data from depositories shows FPIs had pulled out Rs 35,962 crore in January, Rs 22,611 crore in December, and Rs 3,765 crore in November 2025. Despite February’s inflow, foreign investors have recorded a net withdrawal of Rs 1.66 trillion (approximately $18.9 billion) from Indian equities in 2025, marking one of the toughest periods for FPIs in recent years.

Earlier outflows were influenced by volatile currency movements, global trade tensions, concerns over potential US tariffs, and elevated equity valuations. February’s inflow is the highest since September 2024, when FPIs invested Rs 57,724 crore in Indian markets.

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According to a report by Emkay Global Financial Services, foreign inflows were expected to recover once currency volatility stabilised. The brokerage noted that the recent weakness in the rupee was temporary and emphasised that the long-term outlook for Indian equities remains robust.

Domestic institutional investors (DIIs) have played a stabilising role during periods of FPI selling, maintaining market stability and now holding a higher share in Indian equities than FPIs. The report also highlighted that the long-term trend of domestic savings shifting towards equities remains intact, with expectations that household investment in equities will grow steadily over the next decade.

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Despite a recent increase in gold’s share of household savings, incremental equity flows have remained largely unaffected, further supporting the bullish outlook for the Indian equity market.

IANS