Foreign capital is flooding back into Indian equities at the highest velocity seen in nearly a year. After a volatile start to 2026, foreign portfolio investors (FPIs) have turned into aggressive net buyers, injecting over **₹33,487 crore** (approximately **$4 billion**) into the capital markets during the first half of February alone. This surge marks the strongest fortnightly buying since April 2025. It effectively reverses the heavy selling pressure seen in late 2025 and January 2026, when global funds pulled out more than **₹35,000 crore** due to valuation concerns and shifting US bond yields. The primary catalyst for this shift is a landmark **India-US trade deal** finalized in early February. Under this agreement, reciprocal tariffs on Indian goods have been slashed from **25% to 18%**, significantly boosting the competitive edge for Indian exporters. Goldman Sachs analysts suggest this deal could provide an incremental growth boost of **0.2 percentage points** to India's GDP. The market has reacted with optimism, viewing the deal as a "generational reset" that reduces supply chain uncertainty and strengthens the "China plus one" manufacturing narrative. Corporate health is providing a solid floor for this rally. Third-quarter earnings have stabilized, with banks and financial institutions reporting robust balance sheets. Financial services and capital goods have emerged as the top sectors for foreign inflows, attracting **₹6,175 crore** and **₹8,032 crore** respectively this month. Broader economic indicators remain resilient despite global headwinds. India's real GDP is projected to grow by **7.4%** for the 2025-26 fiscal year. While the Nifty 50 and Sensex have faced tactical corrections—closing at **25,178** and **81,287** respectively in the final session of February—the long-term outlook is supported by a "Strong Recovery" phase. Inflation is trending toward the RBI’s **4%** target, currently hovering near **3.9%**. Additionally, India’s foreign exchange reserves remain a formidable buffer at approximately **$701 billion**, providing enough cover for 11 months of imports. Investors are now rotating capital away from services-heavy segments into capital-intensive sectors. While IT has faced temporary headwinds due to AI disruption fears, the overall momentum is being sustained by strong domestic consumption, which is estimated to rise to **7.7%** year-on-year. [FPI Inflow Trends](https://www.youtube.com/watch?v=gBWVd4ALqIg) This video provides a breakdown of the 18% tariff reduction and identifies the specific sectors poised to benefit most from the new trade landscape. http://googleusercontent.com/youtube_content/0