After weeks of sulking on the sidelines, foreign institutional investors ( FIIs) have stormed back into Dalal Street with a vengeance by pumping nearly Rs 15,000 crore into Indian stocks over just the last three trading sessions. This dramatic U-turn comes after nine straight sessions of relentless selling, and it’s turned out to be nothing short of a bull market booster shot.
The Sensex has roared nearly 3,400 points higher in just three days, its sharpest rebound in recent days, driven almost entirely by this FII-led cash deluge.
According to Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, this reversal in FII activity has been caused by two key triggers. First, the dollar index has slipped to around the 100 mark, and the expectation of further dollar weakness is nudging investors away from the US and towards emerging markets like India. Second, while both the US and China are likely to report subdued growth this year, India is expected to clock a 6% GDP growth rate in FY26—even in an unfavourable global environment. This relative outperformance on the macro front could translate into sustained market outperformance, making India a magnet for global capital.
Vijayakumar added that investor focus is likely to remain trained on domestic consumption-driven themes such as financials, telecom, aviation, cement, select auto names and healthcare stocks.
Also read | Sensex jumps 4,700 points in 4 days of fast and furious rally. Time to ride the tide or sell on rise?
Despite this three-day buying binge, FIIs remain net sellers in April, with total outflows still above Rs 18,000 crore for the month. However, foreign allocations to Indian equities had dropped to their lowest levels in years, leaving global funds structurally underweight on India. That allocation gap alone could trigger another wave of buying, should sentiment hold up.
Jitendra Gohil, Chief Investment Strategist at Kotak Alternate Asset Managers, said that if the dollar index continues to depreciate, FII preference for emerging markets will likely improve. Within EMs, India’s outlook remains relatively resilient and attractive compared to peers, though it flagged that uncertainties remain high.
The Indian rupee, meanwhile, is riding this tide. It extended its winning streak for the fourth straight day on Friday, appreciating by 31 paise to settle at 85.37 against the US dollar—its strongest closing since April 4. The rally was supported by both equity inflows and a buoyant risk-on sentiment.
Sumit Jain, Deputy CIO at ASK Investment Managers, noted that redemptions from emerging markets had begun post-October 2024, following Trump’s victory, and continued for nearly five months. But now, flows are stabilising, even if the trend is still young. He believes India, with its strong domestic market and growth fundamentals, stands out as a promising outlier and that the FII outflow trend could begin to fade.
In short, foreign money is back, at least for now. Whether this turns into a steady reallocation or remains a short-term tactical shift will depend on how long the dollar stays weak, how sticky US inflation proves to be, and how convincingly India continues to outperform its global peers. Either way, the mood on Dalal Street has shifted, and for once, it's the foreign hands doing the heavy lifting.
Also read | Nifty Bank on verge of hitting record high on Monday. Will bank stocks keep beating Nifty?
The Sensex has roared nearly 3,400 points higher in just three days, its sharpest rebound in recent days, driven almost entirely by this FII-led cash deluge.
According to Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, this reversal in FII activity has been caused by two key triggers. First, the dollar index has slipped to around the 100 mark, and the expectation of further dollar weakness is nudging investors away from the US and towards emerging markets like India. Second, while both the US and China are likely to report subdued growth this year, India is expected to clock a 6% GDP growth rate in FY26—even in an unfavourable global environment. This relative outperformance on the macro front could translate into sustained market outperformance, making India a magnet for global capital.
Vijayakumar added that investor focus is likely to remain trained on domestic consumption-driven themes such as financials, telecom, aviation, cement, select auto names and healthcare stocks.
Also read | Sensex jumps 4,700 points in 4 days of fast and furious rally. Time to ride the tide or sell on rise?
Despite this three-day buying binge, FIIs remain net sellers in April, with total outflows still above Rs 18,000 crore for the month. However, foreign allocations to Indian equities had dropped to their lowest levels in years, leaving global funds structurally underweight on India. That allocation gap alone could trigger another wave of buying, should sentiment hold up.
Jitendra Gohil, Chief Investment Strategist at Kotak Alternate Asset Managers, said that if the dollar index continues to depreciate, FII preference for emerging markets will likely improve. Within EMs, India’s outlook remains relatively resilient and attractive compared to peers, though it flagged that uncertainties remain high.
The Indian rupee, meanwhile, is riding this tide. It extended its winning streak for the fourth straight day on Friday, appreciating by 31 paise to settle at 85.37 against the US dollar—its strongest closing since April 4. The rally was supported by both equity inflows and a buoyant risk-on sentiment.
Sumit Jain, Deputy CIO at ASK Investment Managers, noted that redemptions from emerging markets had begun post-October 2024, following Trump’s victory, and continued for nearly five months. But now, flows are stabilising, even if the trend is still young. He believes India, with its strong domestic market and growth fundamentals, stands out as a promising outlier and that the FII outflow trend could begin to fade.
In short, foreign money is back, at least for now. Whether this turns into a steady reallocation or remains a short-term tactical shift will depend on how long the dollar stays weak, how sticky US inflation proves to be, and how convincingly India continues to outperform its global peers. Either way, the mood on Dalal Street has shifted, and for once, it's the foreign hands doing the heavy lifting.
Also read | Nifty Bank on verge of hitting record high on Monday. Will bank stocks keep beating Nifty?
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