FPIs close February 2026 with net buying of $2.49 Billion in equities

H1 DOMINATES BULK OF THE HEAVY BUYING IN FEB-26

FPI flow data for February 2026 was a picture of contrasts. For a change, it has been the capital goods segment that has dominated the positive flows in recent months. L&T is seeing a lot of FPI buying on the back of a robust order book and diversification of its business model. For the month of February 2026, FPIs were net buyers in equities to the tune of $2.49 billion. Out of the total inflows, $2.17 billion came in the first half of the month, with just the balance $0.32 million coming in the second half of February. As of Feb-26, equity AUC stood at $789.17 billion and overall AUC at $868.82 billion.

WHAT TRIGGERED THE RETURN OF FPI BUYING IN FEB-26?

1. The most important factor driving the return of FPI flows into Indian equities in February was the signing of the Indo-US trade deal. It was only the framework for the deal, but there was greater clarity that penal tariffs on India would finally go.
2. The Union Budget was a key factor in driving FPI buying in February. The Budget had a strong growth kicker. More importantly, the budget also ensured fiscal prudence; in the form of tighter targets for fiscal deficit and debt to GDP ratio.
3. The third factor that helped FPI buying was relative stability in the Indian rupee. While the rupee stayed beyond ₹90/$, the sharp fluctuations were not happening any longer. However, this could change with the US-Iran war escalating.

SECTORS DRIVING FPI ACTION IN FEBRUARY 2026

From the perspective of sectoral themes, upside themes dominate monthly flows.

1. Capital goods was the star of the month with net FPI inflows of $1.34 billion. L&T attracted substantial FPI buying interest on turnaround in capex cycle.
2. Financial services with $928 million of FPI flows was another attraction. It was more of FPI rebalancing after the heavy sell-off in BFSI seen in recent months.
3. Commodities continued to be attractive to FPIs with oil and metals jointly attracting FPI flows of $1.10 billion on robust commodity price expectations.
4. On the back of expected surge in consumer demand, FPIs also bought into automobiles and construction to the tune of $890 million in February 2026.
5. On the sell side, FPIs sold $881 million of equities across consume services, FMCG and telecom on expectations of an impact on retail consumption spending.
6. IT sector once again bore the brunt of the FPI selling and witnessed a $(1.87) billion sell-off in Feb-26. The fears of Anthropic AI platform and the readiness of Indian IT majors to counter the challenge was the real bone of contention. This comes on top of nearly $9 billion of FPI selling in the full calendar year 2025.

It remains to be seen how much the FPI buying can sustain amid the US-Iran war.