India-US Trade Deal Boosts Market as FIIs Record Biggest Buying Since October
Foreign institutional investors (FIIs) made a strong comeback to Indian equity markets on Tuesday, recording their largest single-day purchase since October, as optimism surrounding the recently finalised India–US trade deal lifted investor sentiment on Dalal Street.
According to data from the National Securities Depository Limited (NSDL), FIIs bought shares worth ₹5,426 crore on February 3, while domestic institutional investors (DIIs) also remained supportive, purchasing equities worth ₹345 crore. The strong inflows helped benchmark indices surge over 2%, marking one of their best single-day gains in recent months.
In the first three trading sessions of February, FIIs have net bought Indian equities worth ₹788 crore, NSDL data showed. Market participants note that if foreign investors remain net buyers for the rest of the month, February would mark the first month of net FII inflows since October.
Trade deal optimism lifts investor confidence
Market experts attribute the renewed buying interest largely to optimism around the India–US trade agreement, which has eased tariff-related concerns and improved visibility for several export-oriented sectors.
US President Donald Trump announced on Monday that India and the United States have finalised the long-awaited trade deal, under which tariffs on Indian exports have been reduced from 50% to 18%, removing a key overhang for Indian markets.
“Strong domestic corporate earnings, especially in consumer and financial sectors, along with lower input costs, stable currency trends, and moderating US bond yields, have reinforced the attractiveness of Indian equities,” said Seema Srivastava, Senior Equity Research Analyst at SMC Global Securities.
FIIs were heavy sellers in 2025
FIIs had been persistent sellers of Indian equities in 2025. As per NSDL data, foreign investors withdrew a net ₹1.06 lakh crore from Indian markets since early August 2025, including ₹35,962 crore in January, following the imposition of higher US tariffs on Indian goods. On a full-year basis, total FII outflows touched a record ₹1.66 lakh crore.
The sustained selling pressure, coupled with a weak rupee and delays in the India–US trade deal, kept Indian equity markets range-bound over the past year, causing them to underperform several global peers.
However, consistent inflows from domestic investors helped cushion the impact. According to a report by Motilal Oswal Financial Services, DII equity inflows reached a record $90 billion in 2025.
FIIs may stay net buyers in February
Market experts believe FIIs are likely to remain net buyers in February, supported by India’s resilient macroeconomic fundamentals, the government’s infrastructure-focused budget, and improving domestic demand.
While risks such as global volatility, oil price fluctuations, and geopolitical tensions persist, analysts expect sectors such as financials, consumer goods, infrastructure, IT services, pharmaceuticals, auto ancillaries, and specialty manufacturing to benefit from improved foreign investor sentiment.
Overall, the India–US trade deal is seen as a key catalyst that has shifted market sentiment from risk-off to cautious risk-on, making sustained FII inflows in February more likely, though experts caution that long-term trends will continue to depend on global macroeconomic conditions.
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