India-US trade deal: Foreign institutional investors (FIIs) made a strong comeback to Dalal Street on Tuesday, with their biggest single-day buying since October 28, 2025, as the finalisation of the much-awaited India–US trade deal boosted investor confidence.
According to the data available on NSDL, FIIs bought shares worth ₹5,426 crore and domestic institutional investors (DIIs) purchased shares worth ₹345 crore on February 3, driving the Indian benchmark indices over 2% higher to one of their best single-day rises in recent history.
In the first three trading sessions of the month, FIIs have net purchased stocks worth ₹788 crore, as per NSDL. If FIIs remain net buyers by the end of February, it will mark the first month since October of foreign inflows.
According to market experts, this surge in buying interest has been largely attributed to the optimism surrounding the recently concluded India–US trade deal, which has eased tariff concerns and boosted investor confidence.
US President Donald Trump on Monday announced that the United States and India have finalised the much-awaited trade deal, cutting tariffs on Indian exports from 50% to 18%, removing a key overhang for the Indian stock market.
“Alongside this, strong domestic corporate earnings, particularly from consumer and financial sectors, have reinforced the attractiveness of Indian equities. Lower input costs, stable currency trends, and moderating US bond yields have further supported the case for sustained inflows,” said Seema Srivastava, Senior Equity Research Analyst, SMC Global Securities Limited.
In 2025, FIIs sold record Indian stocks. As per NSDL data, FIIs withdrew a net ₹1,06,606 crore from Indian equity markets since early August 2025, including ₹35,962 crore in January, after the US imposed an additional 25% tariff on India, taking the effective rate to 50%. On a full-year basis, FII outflows touched a record ₹1,66,286 crore.
Driven by sustained FII selling and a weak rupee, along with stalled India-US trade deal, the Indian equity market largely traded within a narrow range over the past 12 months, sharply lagging most global peers.
The impact could have been far more severe without consistent support from domestic investors. As per Motilal Oswal Financial Services’ (MOLS) report, DII equity inflows touched a record $90 billion in 2025.
FIIs likely to remain net buyers in February, say experts
Market experts believe that, despite uncertainties, the base case outlook suggests FIIs will possibly remain net buyers in February, driven by India’s resilient macroeconomic environment, budgetary push for infrastructure, and improving domestic demand.
Lower input costs, stable currency trends, and moderating US bond yields have further supported the case for sustained inflows, said Srivasatava. However, she cautioned that risks remain in the form of global volatility, oil price fluctuations, and geopolitical tensions, which could quickly alter sentiment.
She expects financials, consumer goods, and infrastructure stocks to benefit from FII buying.
Meanwhile, Prashant Tapse, Sr VP research analyst at Mehta Equities, also believes that post India-US trade deal, the market would see meaningful improvement in FIIs, though sustainability will hinge on global macros.
‘The agreement reduces volatility backed by tariff uncertainty and gives confidence to the economy on improvement in growth visibility for sectors like IT services, pharma, auto ancillaries and specialty manufacturing, and strengthens India’s medium-term earnings trajectory, key inputs for FII asset allocation models,” he said.
Combined with reasonable market valuations after recent corrections and India’s relative growth premium versus other EMs, the deal acts as a sentiment and fundamentals catalyst, Tapse noted.
Net-net, the trade deal tilts the balance from risk-off to cautious risk-on, making net FII inflows in Feb 2026 more probable, though not yet decisively structural, he added.
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