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In the first week of February, foreign investors have invested more than Rs 8100 crore in the stock market.Image Credit source: ChatGPT

This is not a coincidence. Speculations about this were already being made. Experts believed that as soon as the India and US trade deal is announced. After that the direction of foreign investors will move towards India. A clear example of this was seen last week. After three consecutive months of heavy selling, foreign portfolio investors (FPIs) have become net buyers in the first week of February. Due to better risk perception and trade agreement with the US, he has invested more than Rs 8,100 crore in Indian equities. According to experts, this is just the beginning. This figure may see further increase in the coming days. If the pace continues like this, then the month of February may see investment of more than Rs 25 thousand crore by foreign investors in the stock market. Let us also tell you what kind of story the NSDL figures are telling.

Investment came after three months

According to the data, FPI has invested Rs 8,129 crore this month (till February 6). According to depository data, this investment has come after continuous withdrawals in recent months. FPI had withdrawn Rs 35,962 crore in January, Rs 22,611 crore in December and Rs 3,765 crore in November. Overall, FPIs had withdrawn a net Rs 1.66 lakh crore from Indian equities in 2025. The withdrawals were due to currency fluctuations, global trade tensions, US tariff concerns and high valuations of equities. If we talk about the current year, investment still remains negative. If we look at the figures, Rs 27,833 crore has been withdrawn from the stock market.

Who raised hopes among foreign investors?

Himanshu Srivastava, principal manager (research), Morningstar Investment Research India, said the recent purchases reflect growing risk appetite and new confidence in India's growth outlook. He further said that reduction in global uncertainties, stability in domestic interest rate expectations and optimism regarding India-US trade and policy developments strengthened this sentiment. This change is in sharp contrast to the outflow in January, when foreign investors pulled out of Indian markets due to the global risk-free environment and rise in US bond yields.

A lot of expectations from the budget too

Expressing similar views, Wakarjaved Khan, Senior Analyst, Angel One, said the breakthrough in India-US trade talks helped reduce geopolitical uncertainty and boosted the market, along with stability in US yields and supportive measures announced in the Union Budget for FY2026, including fiscal incentives and sector specific incentives, also contributed. Market participants remain cautiously optimistic. Khan said if corporate earnings continue to rise and global trade tensions remain under control, more investment could happen, although continued rupee weakness, high valuations and possible changes in US policy could limit the upside.

improvement in rupee

VK Vijayakumar, Chief Investment Strategist, Geojit Investments, said that the strengthening of the rupee also played an important role in improving the market sentiment. The rupee strengthened against the dollar from a record low of 90.30, however, by the time the market closed on February 6, it fell to around 90.70. He said the rupee is expected to stabilize and gradually rise to below 90 per dollar by the end of March 2026, which could lead to further inflows of foreign investment (FPI), although the outcome will depend on developments related to global trade and artificial intelligence.