Foreign investors are making a strong comeback to Indian equities after months of heavy selling, with improving corporate earnings and easing global headwinds helping revive sentiment towards domestic markets.
Foreign Institutional Investors (FIIs) bought equities worth Rs 13,750 crore on November 6, extending their buying streak to six consecutive sessions. This is their longest run of net buying since August 2026. Out of the last nine trading sessions, FIIs have been net buyers in eight.
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So far in November, foreign investors have pumped in more than Rs 45,000 crore into Indian equities, marking a sharp reversal from the nearly Rs 90,000 crore they pulled out during September and October.
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The turnaround is particularly significant given that October witnessed heavy foreign outflows amid elevated valuations in Indian markets and stronger investment opportunities elsewhere, particularly in China.
What's Driving The Return?
A combination of domestic resilience and improving global conditions appears to be behind the shift.
Indian companies have delivered resilient second-quarter earnings so far, offering foreign investors greater confidence in the country's corporate growth outlook. Strong earnings visibility is particularly important after months of concerns over stretched valuations.
Global market sentiment, meanwhile, has undergone a significant shift. The unwinding of the artificial intelligence trade has triggered sharp corrections across major markets. The Dow Jones and Nasdaq recently witnessed their worst single-day decline in 19 months, while four Asian markets, China, Taiwan, South Korea and Japan, have entered bear market territory.
Foreign investors have also pulled out nearly $45 billion from South Korea and Taiwan in October, reflecting the broader reassessment of risk across global markets.
However, some of the macroeconomic pressures that had weighed on Indian equities are beginning to ease. US bond yields and crude oil prices have cooled from their recent highs, offering some relief to emerging markets such as India.
Lower crude prices are particularly important for India, given its dependence on oil imports. A sustained decline can ease pressure on the country's import bill, support the rupee and improve the overall macroeconomic outlook.
While the latest numbers signal a meaningful change in foreign investor sentiment, a few sessions of buying do not necessarily indicate a durable turnaround.
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Market participants will be watching the trajectory of US bond yields, crude oil prices, currency movements and corporate earnings to assess whether the momentum can continue.
The role of domestic institutional investors (DIIs) will also be important. Interestingly, the latest FII buying streak coincides with the longest run of DII net selling since July 2024.
For investors, the return of foreign money is encouraging, but the sustainability of the rally will depend on whether improving earnings and favourable global conditions continue to support Indian equities.
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