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There are early indications of foreign institutional investors (FIIs) turning towards India markets amid the AI stock upheavals globally, analysts said on Sunday. 

They said it is too early to say that this is a trend reversal, but early signs are positive. During the last four trading days ending on October 30, FIIs were buyers in three days in the cash market. 

There are many factors that might have triggered this change in stance. 

“One, the US Fed holding rates are a positive for equity markets globally. Second, the valuations in Indian markets, particularly in large caps, have become very attractive. Three, perhaps this is more important, there are clear indications of sustained momentum in economic growth in India,” said Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Ltd.

The surge in credit growth is impressive and indicative of robust growth ahead. Credit grew by 19.1 per cent in September (year-on-year). Credit growth to industry is at 19.5 per cent, and services are at 28.3 per cent. 

There are signs of improvement in industrial capex, too. Another factor is the weakening of the AI trade globally. This change in stance of FPIs helped Nifty reclaim the 23,000 level, said the analyst.

Even while selling in large-cap financials, FIIs have been systematically accumulating stocks in pharmaceuticals and healthcare and select digital platform companies.

FIIs have net-sold $59 billion worth Indian equities in the 24 months leading up to September (about $64 billion with October 2026 month-to-date), and rolling 12-month outflows hit a record $40 billion in June 2026. 

“FIIs return when oil breaks, and flows then confirm. The US midterms (November 3) and the Iran path decide when,” according to a note by JM Financial Institutional Securities.

FIIs sold a net $14.9 billion in FY25, $21.9 billion in FY26 and $17.7 billion with October 2026 month-to-date. Before this, FIIs had never sold for more than two straight years.