Mumbai’s stock market is buzzing with renewed foreign interest. Foreign Institutional Investors (FIIs) unleashed their largest monthly inflow in 17 months, pouring a staggering $2.44 billion net into Indian equities during February 2025. This marks the biggest buy since September 2024, signaling a potential shift in global sentiment toward emerging markets.
Exchange data released Thursday reveals FIIs snapped up $2.14 billion in the secondary market and $299 million in primary offerings. This comes after a prolonged period of net outflows, particularly from secondary markets where FIIs withdrew over $46 billion between January 2024 and December 2025. February’s surge followed heavy selling in IT stocks early in the month, amounting to $1.21 billion.
Market watchers urge caution. While the inflow is impressive, it pales against previous sell-offs, suggesting it might be a temporary pause rather than a trend reversal. Analysts point out that sustained IT sector pressure could trigger renewed exits. Yet, optimism lingers as valuations across Indian markets have normalized, reducing the risk of aggressive dumping.
Benchmark indices reflected the positive vibe. The Sensex climbed 1.08% over the past month, Nifty rose 2.05%, while midcap and smallcap indices shone brighter with 4.72% and 5.10% gains respectively. A fresh report highlights early recovery signs, projecting Nifty to hit 27,958 in the next 12 months under base-case scenarios.
Policy clarity, mega trade deals, and infrastructure push are fueling India’s growth story. The India-EU free trade pact could act as a key catalyst for the next expansion cycle. Sectorally, banking and financials stand to benefit from normalizing 13-14% credit growth and stable asset quality. Capital goods and engineering firms are poised for gains from surging infra and defense spends.
As FII confidence rebounds, investors eye whether this February frenzy heralds a sustained bull run or just a fleeting rally in a volatile world.