Foreign portfolio investors have pivoted from aggressive selling to selective accumulation in the first half of February 2026. After a volatile January that saw net equity outflows of ₹35,962 crore, overseas institutions have turned net buyers, infusing approximately ₹8,129 crore in the first week of February alone. The financial services sector, which bore the brunt of a ₹5,402 crore sell-off in late January, is showing signs of stabilization. Fresh data suggests a recovery in sentiment for large-cap banks and non-banking financial companies, with foreign investors returning to risk-on mode following a landmark Indo-US trade deal that reduced geopolitical uncertainty. Metals and mining remain the standout performer for global capital. The sector attracted over ₹8,837 crore in January and has maintained its momentum into February. The Nifty Metal index surged 2.51% over three recent sessions, reaching a high of 12,219.85 as investors move from precious metals into industrial metals like steel and aluminum. Healthcare and pharmaceuticals have transitioned from a defensive play to a target for strategic consolidation. Despite significant outflows of ₹5,560 crore in the latter half of January, the sector is seeing a resurgence in deal-making. Recent reports highlight over ₹10,000 crore in transaction value across hospitals and diagnostics, driven by double-digit growth in average revenue per occupied bed. The Indian rupee has played a critical role in this shift, strengthening from a low of 90.30 to approximately 90.50 against the US dollar. This currency stability, combined with a fiscal deficit target that met global expectations, has encouraged foreign institutions to re-enter the market after offloading ₹29,056 crore across various sectors last month. Domestic institutional investors continue to act as a vital cushion, having absorbed much of the January selling with a net buy of over ₹7,500 crore. While foreign investors remain cautious about premium valuations, their recent net buying of ₹3,697 crore in a single day this week signals a potential trend reversal. Key focus areas for the remainder of the month include export-oriented sectors and infrastructure-linked capital goods. These segments are expected to benefit from the new trade tariffs, which have dropped from 50% to 18% for several Indian exports, further aligning global portfolios with India’s long-term growth narrative.