After months of relentless outflows, foreign portfolio investors made a resounding return to Indian markets in February, injecting ₹22,615 crore—the largest monthly net inflow in over a year and a half. This shift ended a streak of three consecutive months as net sellers.
Key catalysts included the India-US interim trade pact, better market valuations at home, and impressive Q3 results from Indian companies. Together, they restored FPI faith and halted the capital flight.
Looking back, the pain was evident: January saw ₹35,962 crore pulled out, December ₹22,611 crore, and November ₹3,765 crore. The full prior year recorded a massive ₹1.66 lakh crore exit, fueled by rupee swings, international trade frictions, looming US tariffs, and pricey stocks.
This February figure trails only September 2024’s ₹57,724 crore peak. Earlier forecasts from financial services firms anticipated such a bounce, dismissing rupee weakness as temporary while praising India’s enduring equity appeal.
Crucially, domestic players stepped up during FPI retreats. DIIs not only stabilized the market but now dominate ownership stakes over FPIs, providing a safety net against turbulence.
Long-term, domestic savings continue flowing into stocks steadily. Brokerages predict equity’s portion of household savings will expand significantly in the coming decade, undeterred by a modest uptick in gold holdings.
As FPIs rediscover India, the benchmark indices could extend their rally, underscoring the resilience of the world’s fastest-growing major economy.