Mumbai, February 2026 — Foreign Institutional Investors (FIIs) have staged a dramatic comeback in the Indian equity markets this February, logging their largest monthly inflows in 17 months. After a prolonged period of aggressive selling, foreign investors pumped a total of $2.44 billion into Indian stocks, signaling a potential turning point for domestic market sentiment.

A Dramatic Reversal of Fortune

The shift marks a notable break from a grueling cycle of outflows. Between July 2025 and January 2026, FIIs offloaded a staggering $20 billion from the secondary market. However, February’s data from the National Securities Depository Limited (NSDL) shows a clear change in strategy:

• Secondary Market: Injected nearly $2.14 billion, marking the first month of net buying in this segment since July 2025.
• Primary Market: Attracted an additional $299 million, continuing a consistent streak of inflows that has lasted since October 2023.

This influx is the highest recorded since September 2024, when total investments reached nearly $5.95 billion.

The “Anti-AI” Perception and IT Pressure

The return of foreign capital comes after an extended period where India was viewed by global funds as an “anti-AI play.” While markets in the US, China, and Taiwan rallied on AI-focused stocks, Indian IT services faced sharp corrections.

Even during this month’s buying spree, FIIs remained cautious about the tech sector, selling off more than $1.21 billion in IT stocks during the first half of February alone. Despite this sector-specific pressure, a broader “valuation reset” across other industries appears to have encouraged investors to recalibrate their portfolios in favor of India.

Mixed Market Performance

While the “Big Two”—the Sensex and Nifty—remained largely flat during the month, the broader markets showed signs of life. The BSE Midcap 150 gained approximately 2%, and the Smallcap 250 index rose by 1.4%, suggesting that the renewed foreign interest is filtering into more than just blue-chip stocks.

The Long Road Ahead

The recent buying follows a massive exodus where, between January 2024 and December 2025, FIIs offloaded approximately $46.1 billion worth of equities. While February’s numbers are a significant relief, analysts are watching closely to see if this trend is sustainable or merely a temporary recalibration of global portfolios.

Bottom Line

The era of relentless foreign selling may finally be cooling off. While it remains to be seen if this $2.44 billion infusion is a permanent shift, the return of FIIs provides a much-needed boost to market liquidity and investor confidence. For an economy often sidelined during the recent global AI rally, February’s data suggests that India’s core value proposition is once again catching the eye of global fund managers.