FIIs turn buyers in February with Rs 16,912 crore worth of equity inflows. Is this a sign of trend reversal?

Synopsis

Foreign institutional investors (FIIs) turned net buyers in February, investing Rs 16,912 crore amid improved Q3 corporate earnings. While outflows hit Rs 35,962 crore in January, buying returned across financial services and capital goods. Analysts see this as a potential trend reversal, with continued FPI inflows expected through FY26.

Foreign institutional investors (FIIs) have turned net buyers in February, buying shares worth Rs 16,912 in the domestic markets so far. The trend reversal comes on the back of improved Q3 earnings.

Buying returned this month after a lacklustre beginning of the new year. In January, foreign equity outflows were to the tune of Rs 35,962 crore, with net outflows at Rs 19,050 crore on the year-to-date basis.

Dr VK Vijayakumar, Chief Investment Strategist at Geojit Investments, sees a clear trend reversal in FPI flows in February. "FPIs were buyers on nine out of the last sixteen trading days in February through the 20th. As per NSDL data, the total FPI investment through exchanges in February through 20th stood at Rs 14177.66 crores. Additionally, FPIs had invested Rs 2,733.89 crores through the primary market, taking the total investment in February through 20th to Rs 16,911.55 crores," he said.

He also points out big sectoral variations seen in the month so far. While FPIs have sold heavily in IT stocks due to the Anthropic shock, they were buyers in financial services and capital goods.

FPI outlook

On the outlook, Vijayakumar said that the trend of FPI buying will likely continue, going forward. A major factor driving the FPI inflows could be the improvement in corporate earnings, he said, adding that Q3FY26 results indicate a clear pickup in corporate earnings with a 14.7% earnings growth.

"This trend is likely to continue in the rest of FY26, too. As per the early estimates, FY27 earnings growth is likely to be around 15 %. This will make Indian valuations fair and attractive for FPIs to turn buyers in India,” the Geojit analyst said.

In 2025, the FIIs buying trends remained patchy, but the overall trend was bearish. They took Rs 1,66,286 crore from Indian markets as trade deal delay and premium valuations weighed on the sentiments.

The FIIs were net sellers in December, offloading domestic shares worth Rs 22,611.

FIIs sold shares worth Rs 11,766 crore in Q3 after offloading shares worth Rs 76,619 crore in the third quarter of CY25.

Also read: F&O Talk | What the current long-short ratio tells about FII positioning? Sudeep Shah on Ola, Newgen, 4 more top weekly movers

The April–June period of 2025 witnessed inflows totalling Rs 38,673 crore; meanwhile, massive selling to the tune of Rs 1,16,574 crore happened during the January–March quarter.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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