Foreign funds are back in action, injecting $2.44 billion net into India’s stock market in February 2025—the highest since September 2024 and the biggest in 17 months. This secondary market dominance, with $2.14 billion bought alongside $299 million in primaries, reverses a grim trend of massive outflows.
From October 2023, primary market purchases held steady, but secondary markets saw over $46 billion flee between January 2024 and December 2025. February’s net buying emerged despite a $1.21 billion IT stock purge at the month’s start, showcasing resilience amid sector-specific jitters.
Experts temper enthusiasm. ‘This is smaller than prior sell-offs and may signal a breather, not a pivot,’ one analyst noted. Persistent IT weakness could reignite outflows, though balanced valuations offer a buffer against panic selling.
Market performance underscores the uplift: Sensex up 1.08%, Nifty 2.05%, Nifty Midcap 100 at 4.72%, and Smallcap 250 surging 5.10% in the last month. Recent forecasts paint a bullish picture, with Nifty potentially reaching 27,958 over 12 months, driven by policy stability, trade pacts, and infra momentum.
India’s narrative is evolving with initiatives like the India-EU FTA poised to turbocharge growth. Banks and NBFCs could thrive on 13-14% credit expansion and solid asset books. Meanwhile, infra and defense booms position capital goods players for substantial upside.
With FIIs returning in force, the question looms: Is this the dawn of a new investment era or a short-lived spike? Indian equities, now attractively priced, await the verdict.