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FIIs Change of bias Post US Trade Deal announcement

ICICIdirect Research 19 Feb 2026 DISCLAIMER

After the announcement of US trade deal. FIIs have bought nearly 11.5k Cr in cash segment indicating likely change of bias from FIIs after continued sell-off of last few quarters. Moreover, in the derivatives segment, FIIs net shorts have declined sharply to 1.33 Lakh contracts from more than 2 Lakh contracts indicating ongoing short covering.
The concerns due to continued outflows were visible in the currency and INR had deprecated significantly in comparison to other currencies and made lows ~92.5 in the month of January. However, after the announcement of the trade deal, domestic currency has appreciated sharply by ~2% in the anticipation of renewed capital flows. Considering appreciation in currency along with net buying in Equity segment, we believe that FIIs bias towards Indian equities is changing and fresh inflows are likely to be seen in the coming weeks.
While in the near term, due to MSCI rebalancing we might experience some outflows towards the month end, but considering the expected change of bias from FIIs, positive outlook should be maintained.
Among sectors, major outflow was clearly evident in the Technology stocks due to expected AI threat and Nifty IT index (10% weight in Nifty) is down by ~12% in the month so far.  In spite of that, Nifty has managed to remain in green suggesting broader market performance. Prima facie, major beneficiaries of the flows are Industrials and Capital goods sectors where continued outperformance is expected.

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