Foreign investors pour nearly Rs 46,000 crore into Indian equities, sparking strong market rally

Foreign institutional investors (FIIs) recorded a net inflow of Rs 45,960 crore into Indian equities over the week ending November 6, offsetting the Rs 45,162 crore withdrawn in October and coinciding with one of the strongest weekly rallies for the Nifty and Sensex. FIIs bought in all five trading sessions, extending a two-week buying streak after a 10-week period of net selling, while domestic institutional investors (DIIs) turned net sellers for the first time in 12 weeks, offloading shares worth Rs 24,197 crore.

The bulk of the foreign buying occurred on Thursday and Friday, when FIIs invested a combined Rs 28,724 crore, including a single-day record of Rs 14,975 crore on November 5 – the largest daily FII purchase in more than a year. In contrast, DIIs sold Rs 16,413 crore during the same two days.

Analysts attribute the renewed foreign interest to several factors. V K Vijayakumar, chief investment strategist at Geojit Investments, said the correction in AI-related stocks in the United States and other Asian markets, driven by concerns over data-centre spending, made India, which is less exposed to AI, more attractive. He added that strong earnings growth and relatively low large-cap valuations also supported the inflow. Nomura’s research highlighted the same earnings and valuation dynamics, noting that the AI-sector pullback could redirect capital toward markets like India.

Additional supportive elements include expectations of a possible reduction in long-term capital gains tax for foreign investors, easing geopolitical tensions, lower bond yields and a sharp decline in crude-oil prices. However, the sustainability of the inflows remains uncertain. Pabitro Mukherjee, deputy vice-president-research at Bajaj Broking, warned that future foreign buying will depend on crude-oil price movements and developments in US-Iran relations, as well as the upcoming Q2FY27 earnings season.

Technical analysts note that the Nifty has reclaimed major moving averages, suggesting an improved market structure, but the rapid rally could lead to near-term consolidation. Hariselvan Radhakrishnan, founder and CEO of HST Wealth, said a continued FII inflow, stable oil prices and a breakout above the 60,000 level in the Bank Nifty would reinforce the upward momentum, while persistent US inflation, renewed geopolitical risks or a narrowing market breadth could trigger profit-booking.

Overall, the week’s foreign inflows have helped lift the Nifty by 1,977 points (8.57%) to 25,030 and the Sensex by 6,568 points (8.82%) to 81,028, but market participants will watch closely for signs of lasting foreign participation.