Foreign portfolio investors have poured money into Indian shares at a pace not seen in months, and the trigger came from a sell-off in artificial intelligence stocks on the other side of the world. FPI inflows into India reached a net Rs 45,970 crore in November so far, according to data cited by news agency IANS on 8 November, as a sharp correction in AI-linked shares in the United States, South Korea, Taiwan and Japan pushed global funds toward markets with little exposure to the AI build-out. The rush of money lifted the Nifty 50 by 8.6 per cent across five sessions, closing the week at 25,030.35, while the Sensex rose 8.82 per cent to 81,028.
The buying marked a sharp change from October, when foreign investors withdrew a net Rs 45,162 crore from Indian equities. FPI inflows into India in the week to 6 November were spread across all five trading sessions, with foreign funds net buyers on each day. The heaviest day came on Thursday, 5 November, when overseas investors bought a net Rs 14,975 crore, the largest single-day foreign purchase of Indian shares in more than a year. A day later they added Rs 13,750 crore, taking their buying run to 14 straight trading sessions and cumulative purchases since 16 October to Rs 53,154 crore.
Domestic institutions moved in the opposite direction as FPI inflows into India surged. Domestic institutional investors sold a net Rs 24,197 crore during the week, ending an 11-week run of buying, as they booked profits after the sharp recovery in share prices. On 4 November alone, domestic funds sold a record Rs 10,444.5 crore. The contrast between foreign buying and domestic selling was the clearest sign of how the week’s rally was funded, with overseas money doing the lifting while local funds took money off the table.
FPI inflows into India and the AI sell-off
The latest FPI inflows into India began with the sell-off in AI stocks. Fears over runaway spending on data centres in the United States unsettled investors, and the sell-off spread to AI-heavy markets in Asia. The Democrats, who won both chambers of Congress in the midterm elections, oppose indiscriminate spending on data centres and are expected to demand guard rails for artificial intelligence, analysts said. V K Vijayakumar, chief investment strategist at Geojit Investments, said the sudden change in foreign positioning was triggered by the AI sell-off in the US and other AI markets such as South Korea, Taiwan and Japan.
India gained from the shift because it is widely seen as a non-AI trade. The country’s listed companies have little exposure to the hardware businesses that dominate markets such as South Korea and Taiwan, so the correction in AI shares left Indian benchmarks largely untouched. Foreign funds concentrated their buying in index heavyweights across financials, information technology, automobiles and telecom. Global brokerage Nomura has also said Indian equities could become more attractive to foreign investors as earnings improve and valuations stay below their post-pandemic averages.
FPI inflows into India lift the Nifty 8.6 per cent
The Nifty rose in all five sessions of the week and closed at its high point, up 1,977 points or 8.57 per cent, its biggest weekly percentage gain in about six years, according to Mint. The Sensex climbed 6,568 points over the same period. The rally came after Indian benchmarks had lagged global peers for much of the year. FPI inflows into India supplied the fuel, with overseas investors pumping a net Rs 28,724 crore into shares across Thursday and Friday alone.
Cheaper oil added to the lift. Brent crude fell nearly 16 per cent during the week to around 98 dollars a barrel as worries over the West Asia conflict eased, a relief for India, which imports roughly 85 per cent of its crude. Lower oil prices cut the country’s import bill and ease pressure on inflation, supporting corporate margins and household budgets. The fall in crude, combined with lower US Treasury yields, gave foreign funds one more reason to add to FPI inflows into India.
What could slow FPI inflows into India
Analysts quoted in the reports cautioned that the buying may not last at this pace. The sustainability of foreign inflows remains the main question for the weeks ahead, and much depends on whether the AI sell-off continues or steadies, and on whether Brent crude stays below roughly 90 to 95 dollars a barrel. Domestic funds have already started to sell into the rally, and a pause in FPI inflows into India would leave the market without its main support. For now, the numbers show a market that has turned quickly: five sessions of foreign buying, a Nifty back above 25,000, and a week that wiped out October’s entire foreign outflow in one stroke.