Foreign institutional investors have made a notable return to the Indian stock market, with net purchases exceeding $2 billion over the last nine trading sessions, according to provisional exchange data. The renewed inflow has supported a rally on Indian stock exchanges, reflecting a shift in investor sentiment after months of cautious behaviour and outflows in 2025.
Market analysts say this resurgence in foreign buying is emerging at a time when valuations have moderated following earlier corrections and when global and domestic developments, including a new trade agreement with the United States, have helped improve market confidence.
FIIs Turn Net Buyers As Markets Rebound
Data compiled from exchange reports show that foreign institutional investors were net buyers in six out of the nine trading sessions between late January and early February, while they were marginal sellers in the remaining three. On February 9, FIIs continued their buying streak by investing roughly Rs 2,223 crore on a provisional basis, indicating sustained interest in Indian equities.
Experts note that this return to buying follows a period of outflows, when FIIs reduced their exposure due to global macroeconomic concerns, valuation pressures and geopolitical headwinds. The latest inflows have coincided with a rebound in benchmark indices such as the Sensex and Nifty, which have traded closer to long term average valuations following recent corrections.
Domestic institutional investors have also remained active during this period, adding to the positive market momentum. In some cases, DIIs have made substantial purchases, reflecting robust participation across investor classes.
Positive Outlook And Cautious Optimism
Market observers say that the return of FIIs is a sign of renewed confidence but caution that it is still early to conclude whether this trend will lead to a sustained rally. Factors such as continued global economic stability, corporate earnings performance, interest rate trends and geopolitical developments could influence foreign investor sentiment in coming weeks.
The improved outlook is also supported by external developments. A recently concluded trade deal between India and the United States helped resolve tariff uncertainties and provided a boost to investor confidence, contributing to stronger inflows into Indian markets.
Broader Market Response
The fresh foreign buying interest has translated into broader market gains, with major indices posting positive movements and certain sectors showing outsized performance. Investors are watching closely to see if the upward trend will extend to midcap and smallcap stocks, which have shown early signs of recovery amid rising foreign and domestic participation.
As this scenario unfolds, stakeholders including retail investors, fund managers and policy makers will monitor shifts in investment patterns and economic indicators that may impact future market performance. The return of significant foreign capital is likely to remain a key factor in shaping India’s stock market trajectory in the near term.
