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FIIs May Turn Buyers in India on US Trade Deal Hopes, Earnings Uptick

Analysts indicate foreign institutional investors (FIIs) could become net buyers in India, spurred by optimism around a potential US-India trade agreement and an expected uptick in corporate earnings growth. However, geopolitical developments and negative comments from US officials have delayed the trade deal, dampening sentiment and leading to continued FII selling of Rs 11,784 crore in early January. The sell-off has been broad-based, particularly hitting cyclical sectors like energy and metals, with the Nifty declining significantly despite domestic institutional buying. Experts advise a cautious approach, noting that sustained market recovery hinges on greater clarity regarding global trade, earnings, and the direction of FII flows.

Key Points: FIIs to Turn Buyers in India on Trade Deal, Earnings Growth

  • FII selling hit Rs 166,283 crore in 2025
  • Geopolitical tensions delayed US-India trade deal
  • Energy and metals stocks were top laggards
  • Sustained upside needs clarity on earnings and FII flows
2 min read

FIIs to turn buyers in India over positive developments on US-India trade deal

Analysts predict FIIs will turn net buyers in India, driven by potential US-India trade agreement and corporate earnings recovery, boosting market sentiment.

"At the beginning of 2026, the expectation was that FIIs will turn buyers on improvement in GDP growth and corporate earnings. - Dr. VK Vijayakumar"

New Delhi, Jan 11

Analysts on Sunday said that foreign institutional investors will turn buyers in India with positive developments on the US-India trade agreement and uptick in earnings growth, which will improve investor sentiment.

FII investment in early 2026 has begun with the continuation of the trend of the previous year.

In 2025, FIIs had net sold equity for Rs 166,283 crore, impacting the performance of the Indian market and also weakening the rupee by about 5 per cent.

"At the beginning of 2026, the expectation was that FIIs will turn buyers on improvement in GDP growth and corporate earnings," said Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Ltd.

Also, the market expectation was that the much delayed US-India treaty will materialise early in the year.

"But geopolitical developments took a turn for the worse with the US intervention in Venezuela and absence of positive developments on the trade talks. Some negative comments from the US commerce secretary gave the impression that the trade agreement will be further delayed," he noted.

This impacted the market sentiments and FIIs continued selling by increasing the volume of selling in the last two trading days.

The total FII selling (cash market) through January 9 stood at Rs 11,784 crore.

The market sentiments have turned weak that despite DII buying of Rs 17,900 crore in January through 9, Nifty drifted down by 618 points in the week ending January 9.

The sell-off last week was broad-based, with cyclical and policy-sensitive sectors bearing the brunt of the correction.

Energy, metals, and realty stocks emerged as the top laggards, weighed down by concerns over global trade disruptions, commodity demand uncertainty, and risk-off positioning. Banking stocks also declined, with Bank Nifty underperforming the broader market amid cautious sentiment and persistent FII selling, said Ajit Mishra - SVP, Research, Religare Broking Ltd

In the current environment of heightened volatility and global uncertainty, a cautious and disciplined approach is advisable.

"While bargain hunting could lead to intermittent rebounds after the sharp correction, sustained upside is likely to remain capped until greater clarity emerges on earnings, global trade developments, and FII flows," said Mishra.

- IANS

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Reader Comments

P
Priya S
While FII flows are important, we must not forget the resilience of domestic investors. DIIs bought nearly 18,000 crores! This shows strong faith in India's long-term story. We should build more domestic capital and not rely so heavily on foreign money.
V
Vikram M
The volatility is nerve-wracking for small investors like me. One week the experts say FIIs will turn buyers, the next week they sell 11k crore. It feels like our market is a puppet in global geopolitical games. Need more stability.
R
Rohit P
The focus should be on corporate earnings growth, not just FII whims. If our companies perform, the money will follow. This correction in metals and energy might be a good buying opportunity for the long term. What do others think?
S
Sarah B
Watching from the US, it's clear the trade deal delay is more about American election-year politics than India's merits. Once the political uncertainty here settles, I expect a swift agreement. India's growth story remains compelling for global portfolios.
M
Meera T
With all due respect to the analysts quoted, their predictions about FIIs turning buyers at the start of the year were off the mark. It creates false hope. Media should report facts more and predictions less. The DII buying is the real positive takeaway.
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