Foreign Portfolio Investors Pour $8.2 Billion into Indian Equities, Breaking Two-Year Selling Trend: Jefferies

Foreign portfolio investors (FPIs) have returned to Indian equities with $8.2 billion in net inflows since mid-October, marking a notable turnaround after nearly two years of sustained selling, according to a report by global brokerage Jefferies.

In its India Equity Strategy report titled “Where Could a Revival in FPI Flows Go?”, Jefferies noted that FPI flows have turned positive following a prolonged period of capital withdrawal. A significant portion of these recent inflows—totaling $5.8 billion—came in just six trading sessions leading up to November 6.

This recovery follows heavy outflows recorded between September 2024 and October 2026, during which FPIs withdrew approximately $61 billion from Indian equities. The first 10 months alone accounted for $31 billion in outflows.

Despite the recent return of foreign capital, FPI ownership in BSE500 stocks remains at a 10-year low of 17.3 percent, down from 19.6 percent in September 2024. Jefferies' analysis of 70 large active emerging-market funds managing a combined $370 billion showed that 61 percent of these funds were underweight on India as of September 2026. Overall FPI positioning remains light, with India's average overweight position in these funds standing at just 0.1 percentage points compared to the 10-year average of 2.2 percentage points.

The Jefferies report outlined several factors that could support continued inflows, including a potential shift in global investments away from artificial intelligence-related stocks, easing crude oil prices, potential equity tax relief, and resilient domestic economic conditions. The brokerage also pointed to healthy festive-season automobile sales, strong power demand, and credit growth as indicators of a stable economic outlook.

Regarding market valuations, the Nifty 100 is currently trading at approximately 18.6 times its estimated earnings for the next 12 months, which sits about 5 percent below its 10-year average. Jefferies suggested that large caps could serve as a cleaner play for returning FPI capital, as larger companies stand to benefit more directly from sustained foreign investment recovery.

"The return of $8.2 billion in foreign portfolio inflows after nearly two years of consistent selling marks a critical sentiment shift for the Indian equity market. While overall foreign ownership remains at a decade low and positioning is light, this renewed interest points to underlying resilience in domestic economic indicators like credit growth and festive consumption. For businesses and larger enterprises, this influx could translate to better liquidity and stabilization, creating a more favorable environment for capital raising and long-term strategic growth." — Dr. Shishir Gupta, Founder & CEO, StartupLanes