Foreign portfolio investors (FPIs) have turned net buyers of Indian equities, investing ₹53,739 crore during the first nine days of November, from November 2 to 9. The strong return of foreign capital follows two consecutive months of substantial selling and signals a possible improvement in investor sentiment. However, the latest inflow must be viewed against the backdrop of record withdrawals from Indian equities during 2026.
A Sharp Reversal After Two Months of Selling
Depository data show that FPIs made net equity purchases of ₹53,739 crore over six trading sessions. This is the strongest monthly buying since September 2024 and represents a significant reversal from:
· October: Net equity outflow of ₹34,843 crore.
· September: Net equity outflow of ₹35,861 crore.
· Combined withdrawals: ₹70,704 crore over two months.
Despite November's recovery, cumulative FPI withdrawals from Indian equities in 2026 have reached ₹2.41 lakh crore, or ₹2,41,406 crore. This exceeds the ₹1.66 lakh crore net outflow recorded during the whole of 2025, making 2026 the worst year for foreign equity withdrawals.
Why Foreign Investors Are Returning
Market participants attribute the renewed interest partly to an AI-led sell-off in global markets. As concerns over elevated valuations and concentrated investments in artificial intelligence-related stocks prompted investors to reduce exposure, India emerged as a relatively attractive alternative.
Other supporting factors include:
· Strong domestic corporate earnings growth.
· More attractive valuations among large-cap stocks.
· India's relatively resilient economic fundamentals.
· Improving foreign investor appetite following late-October buying.
FPIs had already purchased approximately ₹6,300 crore between October 26 and 30, following nearly ₹2,700 crore in selling during the preceding week.
Debt Investments Present a Mixed Picture
Foreign investment in Indian debt instruments also reflected selective confidence. FPIs invested ₹7,759 crore through the Fully Accessible Route (FAR), while withdrawing ₹591 crore through the Voluntary Retention Route (VRR) and ₹270 crore through the general route.
The FAR inflow is particularly significant because it reflects continued foreign participation in government securities, supported by India's inclusion in global bond indices.
A Recovery, But Not Yet a Reversal
The November inflow, equivalent to approximately $6 billion, offers encouragement to Indian markets. However, six trading sessions of strong buying cannot erase the year's unprecedented withdrawals.
Can India Sustain the Foreign Capital Comeback?
The durability of this recovery will depend on global market stability, US interest rates, crude-oil prices and India's earnings performance. If volatility in AI-related investments continues, India could attract further portfolio reallocations. Nevertheless, sustained inflows will require consistent corporate growth, competitive valuations and macroeconomic stability. The latest buying is an encouraging signal, but a lasting reversal in foreign investor sentiment remains to be established.
(With agency inputs)
