Foreign Portfolio Investors (FPIs) have made a significant return to Indian equity markets, injecting a substantial ₹38,971 crore this week, according to NSDL data.
This renewed interest comes amidst a sharp global sell-off in technology stocks, primarily driven by concerns surrounding artificial intelligence (AI) investments and a potential slowdown in data centre spending.
Initially, foreign investors had been divesting from Indian equities, drawn by the burgeoning AI-related markets globally. However, the recent correction in these global AI stocks has now made Indian equities a more attractive proposition for overseas investors, reversing the earlier outflow trend.
Global stock markets experienced considerable selling pressure towards the end of the week. This intensified after major US indices recorded their worst single-day losses since April 2025, erasing gains from an earlier post-election rally. V K Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, noted a sudden role reversal: FPIs became aggressive buyers while Domestic Institutional Investors (DIIs) consistently sold. This aggressive FPI buying, coupled with a short squeeze, fueled a significant market rally, with the Nifty gaining 7.58% in a single week.
Vijayakumar attributed this shift in FPI strategy to the AI sell-off in the US and other AI-focused markets like South Korea, Taiwan, and Japan. He highlighted that India, perceived as a ‘non-AI trade,’ coupled with impressive earnings growth and attractive large-cap valuations, has emerged as a favored investment destination. FIIs have particularly focused on index heavyweights in financials, IT, automobiles, and telecom, signaling confidence in India’s economic resilience.