Trade Family and Economic Optimism Propel Inflows

Foreign portfolio investors (FPIs) have injected approximately $4.11 billion into Indian equities over the past nine trading sessions. This marks their longest consistent buying streak since July 2023, fueled by optimism surrounding a possible U.S.-India trade agreement and India’s status as the fastest-growing large economy in FY 2026. During this period, the Nifty 50 saw a considerable 6.6% gain.

Key Factors Behind the Surge in Investment

• Anticipation of U.S.-India trade discussions: Treasury Secretary Scott Bessent noted India could finalize tariff reductions sooner than expected.

• Strength of the Indian economy: In contrast to the U.S. and China, more vulnerable to global trade tensions, India’s robust growth and stable policy framework attract significant capital.

• Valuation appeal: Nifty’s trading status below its September 2024 peak encourages buyers seeking attractive corporate multiples.

Valuation Edge: Attractive Multiples for Investors

Large-cap companies across consumer goods, financials, and energy sectors present compelling opportunities for investors. Data indicates that industrials and consumer discretionary stocks are trading close to 15× forward P/E, well below their 10-year average of 18×, making them appealing to FPIs.

Geopolitical Risks Gradually Fade, Earnings Shine

Despite recent tensions following a militant attack in Kashmir, equity flows have remained resilient as investors paid attention to strong Q4 results from major players like Reliance Industries (NSE: RELI) and other blue-chip companies. Analysts note India’s robust corporate earnings and improving trade relations create a favorable environment for ongoing capital inflows.

Upcoming Events to Monitor

• Trade negotiations: Any formal agreement or delays regarding U.S.-India tariff changes may lead to market volatility.

• Earnings announcements: Q1 results from key banks and exporters will test whether profit growth can sustain the rally.

• Global sentiment shifts: Changes in U.S.-China relations and broader market dynamics will influence India’s attractiveness among emerging markets.

This blend of positive trade sentiment, favorable valuations, and earnings momentum fuels the unprecedented FPI surge in Indian equities.