Sell fast, buy faster! FIIs broke every selling record in 2026. Now their buying is breaking records

Foreign institutional investors (FIIs) are returning to Indian stocks with a force that is beginning to rival the scale of their earlier exodus. After selling a record Rs 2.95 lakh crore worth of Indian stocks in the first 10 months of 2026, FIIs are now poised to set a new monthly buying record in November to help drive the Sensex and Nifty up about 10% this month.

FIIs bought Rs 12,563.33 crore of Indian equities on Wednesday, taking their total November purchases to Rs 73,261.33 crore. That has already surpassed the previous monthly record of Rs 66,135 crore set in December 2023. However, we are not even halfway through the month and flows can move in either direction even as the outlook remains bullish.

The reversal has come barely weeks after relentless foreign selling pushed the rupee to a record low of 96.96 in May and back near 97 in October, before the currency recovered.

The market rebound has been equally sharp. The Sensex and Nifty have gained around 10% in November. The Sensex has also erased all its losses since the Middle East war began in late February. It stood at 82,248.61 on Feb. 26, before the conflict began, and has now crossed that level again.

“The tug of war between the FIIs and DIIs till November saw the FIIs on the sell side and DIIs on the buy side. Now the positions have been completely reversed with FIIs turning aggressive buyers and DIIs turning consistent sellers. This FIIs vs DIIs position will set the market trend in the near-term,” Dr. V K Vijayakumar, chief investment strategist at Geojit Investments.

Also Read |Promoters’ stake hits 3-year high while FIIs sink to 14-year low: What it means for Indian stocks

Why are FIIs buying again?

Foreign investors have turned buyers as crude prices eased and India emerged as a hedge against the global artificial intelligence sell-off. The Democrats’ victory in the US mid-term elections has also contributed to the shift in global market positioning, according to the information provided by analysts.

The reversal follows a record-breaking sell-off. In the calendar year 2026 up to October, FIIs sold a record Rs 2.95 lakh crore of Indian equities, the highest-ever outflow in the period.

Analysts now point to a combination of potential AI trade reversal, any equity tax relief, resilient domestic macroeconomic conditions, reasonable large-cap valuations and light investor positioning as factors that could sustain the foreign buying.

Vijayakumar said FIIs had already invested Rs 65,735 crore in Indian equities in November and that the trend could continue to reach an all-time high. He also cited impressive earnings growth and macroeconomic relief from lower crude prices, with Brent around $92, as additional support for the rally.

However, he warned that domestic institutional investors may continue profit-taking, limiting the market’s advance. He also flagged the risk of October CPI inflation coming in around 6%, which could raise the possibility of a 25-basis-point rate hike in December followed by another 25 basis point increase in February. Such a scenario would affect rate sensitive stocks.

Read More: FIIs are back with a bang but why are stocks from only 2 sectors their favourites?

Earnings have held up

The FII comeback is also being supported by domestic earnings, which have remained resilient despite the prolonged market correction.

“The correction in Indian equities from the Sep-24 peak to the October low was led more by the adverse global backdrop than by deterioration in domestic fundamentals,” said Saharsh Kumar of Elara Securities. “Earnings, by contrast, have held up well.”

Profit after tax for the 395 NSE 500 companies that had reported their second-quarter results was up 27.5% year-on-year, according to Kumar.

“After two years of sideways trade, Indian markets are on the cusp of a shift in the cycle,” he said. “In our view, the shift will also change which stocks lead.”

Kumar said the stocks that led the market during the correction may not lead the next upcycle. Instead, he expects a pivot in market leadership “from market movers to fallen angels.”

Can the buying continue?

The scale of November’s inflows is a clear positive signal, but it is too early to treat the reversal as permanent. The month is only halfway through, and foreign money can move in and out quickly.

For now, however, the trend is favourable. FIIs have shifted from being the biggest source of market pressure to the strongest driver of the rally. Whether that continues will depend on crude prices, global positioning, domestic earnings, valuations, inflation and the policy outlook.

As Vijayakumar put it, the immediate market direction will be determined by the changing balance between FIIs and DIIs.

(Data: Ritesh Presswala)

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)