Foreign institutional investors (FIIs) saw their largest inflow in 17 months in February, with net inflows totaling about $2.44 billion, based on exchange data from Thursday. In February, FIIs purchased around $2.14 billion in secondary markets and $299 million in primary markets, marking the highest monthly net purchase since September 2024.
Despite cumulative secondary market outflows exceeding $46 billion between January 2024 and December 2025, FIIs have maintained steady primary market buying since October 2023. The net inflow in February, however, occurred alongside significant selling of $1.21 billion in IT stocks earlier in the month.
Analysts have noted that the February inflows, while significant, may not fully offset previous selling trends and could indicate a temporary pause rather than a complete reversal. Concerns persist over potential renewed outflows, particularly in the IT sector, although the argument for aggressive selling has weakened due to more moderate valuations in Indian equities.
In the past month, the Sensex has risen by 1.08%, while the Nifty has increased by 2.05%. Additionally, the Nifty midcap 100 and SmallCap 250 Index have seen gains of approximately 4.72% and 5.10%, respectively. Market observers are beginning to see signs of recovery in Indian markets, with projections suggesting the Nifty could reach 27,958 over the next year under a base case scenario.
A recent report highlighted India’s advancing growth narrative, attributing it to policy clarity, significant trade agreements, and ongoing infrastructure development. Notably, India’s progress in trade diplomacy, including the India-EU Free Trade Agreement, has been identified as a key driver for the upcoming growth cycle. The report also pointed out that banks, diversified financials, capital goods, and engineering companies are well-positioned to benefit from various market trends.
