Foreign Portfolio Investors (FPIs) turned net buyers in February, injecting ₹8,100 crore into Indian markets during the first week, driven by optimism around US-India trade agreements. The surge marks a significant shift from previous months, signaling renewed institutional confidence in India’s economic trajectory.
The uptick in FPI inflows coincides with heightened expectations surrounding the Comprehensive Economic Partnership Agreement (CEPA) between the US and India. Analysts attribute the rally to easing geopolitical tensions and improved trade terms, which have softened market volatility observed in January. Sectoral analysts noted increased FPI activity in technology and manufacturing sectors, aligning with India’s positioning as a global supply chain hub.
On-Air reports from Valley markets highlighted aggressive buying patterns on Dalal Street, with algorithmic trading systems snapping up equities ahead of budget announcements. Brokers recorded peak trading volumes, particularly in export-oriented companies benefiting from reduced US tariffs. Meanwhile, small-and-mid-cap stocks saw mixed responses, with agritech firms outperforming traditional sectors.
Economic policy experts emphasized the broader implications of this trend. Dr. Rajesh Gupta, a trade economist at IIM Bangalore, stated, “Sustained FPI inflows could strengthen the rupee and reduce borrowing costs, creating a virtuous cycle for infrastructure development.”
However, challenges persist. Foreign exchange outflows from commodity imports and infrastructure projects continue to pressure India’s balance of payments. The government remains focused on fiscal consolidation to meet inflation targets ahead of the April-March fiscal year-end.
For individual investors, the surge in FPI activity has spurred renewed interest in equity derivatives. Trading platforms reported a 40% increase in futures and options contracts during the week, though sentiment remains cautious ahead of monsoon season volatility.
Looking ahead, all eyes are on the upcoming US-India supply chain summit in Washington. Policymakers hope to translate trade rhetoric into concrete investments in renewable energy and defense partnerships.
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