India Draws $1.6 Billion in Foreign Stock Buying as Global AI Selloff Tests Its Recovery

Foreign buying surges as India faces a global market shock

Foreign investors bought a net 147.96 billion rupees ($1.6 billion) of Indian shares on November 5, 2026, the largest daily purchase since February 24, 2021, according to provisional stock exchange data. The surge came just before a steep fall in global technology stocks tested whether India's recovery could withstand another wave of selling.

Indian benchmarks initially held their ground. On Friday, November 6, the Nifty 50 opened at 24,538.20, almost unchanged from Thursday's close, while the Sensex opened 0.13% higher at 79,413.66. Across Asia, South Korea's Kospi fell more than 7%, Taiwan's benchmark dropped about 8% and Japan's Nikkei lost roughly 6% in morning trading.

India's appeal rests on several changes happening together: cheaper oil, improving corporate earnings, lower stock valuations and renewed interest from foreign funds after months of withdrawals. Its relatively small exposure to listed companies tied directly to artificial intelligence has also become a selling point as investors retreat from that trade.

Oil was already threatening to weaken that case. Brent crude, which had fallen to around $94 a barrel during the week, crossed $100 again on Friday as uncertainty over the Iran conflict persisted. India's early resilience therefore faced pressure from both global share prices and its energy import bill.

Thursday's foreign purchases were the strongest in more than five years. The previous larger purchase, 287.39 billion rupees on February 24, 2021, included a large block transaction involving a company's controlling shareholder. Such a transaction can make a single day's investment total unusually large.

How large is the return of foreign money?

Provisional exchange figures put net foreign purchases over five sessions at 208.35 billion rupees, or about $2.2 billion. Thursday alone accounted for approximately 71% of that total, showing how heavily the buying was concentrated in one session.

Other market tallies put Thursday's net purchases at 13,802 crore rupees and 14,974.68 crore rupees, compared with the provisional exchange figure of 14,796 crore rupees. A crore is 10 million rupees. V K Vijayakumar, chief investment strategist at Geojit Investments, cited purchases of 35,781 crore rupees over five sessions, rather than the 20,835 crore rupees in the provisional exchange series. The reasons for those differences were not specified.

A daily cash market breakdown recorded foreign purchases of 20,834.04 crore rupees across four sessions from October 30 to November 4. Domestic institutions sold a net 8,600.79 crore rupees during that period, taking profits as overseas funds increased their exposure.

The buying follows a much larger retreat. Foreign investors withdrew 35,861 crore rupees in September and 34,843 crore rupees in October, with cumulative equity outflows reaching 2.95 lakh crore rupees through October. Foreign investors had bought 20,200 crore rupees in July and 29,631 crore rupees in August, showing that the year's retreat included temporary periods of renewed buying.

Recent flows also included substantial demand for a new listing. By November 3, foreign portfolio investment over the preceding 10 days totalled $2.28 billion, with Jio Platforms' listing accounting for nearly half. The recovery in foreign demand therefore combines purchases of existing shares with investment in newly listed stock.

From October withdrawals to November gains

Foreign buying began to improve before the US midterm election outcome became clear. Figures attributed to Central Depository Services Ltd showed purchases of about 6,300 crore rupees between October 26 and 30, following withdrawals of nearly 2,700 crore rupees in the week ended October 23.

The main developments unfolded as follows:

• September and October: Foreign investors withdrew a combined 70,704 crore rupees from Indian equities.
• October 30 to November 4: A cash market series recorded 20,834.04 crore rupees in net foreign buying over four sessions.
• November 5: Provisional exchange data showed net foreign purchases of 14,796 crore rupees as Indian benchmarks extended their winning streak to six sessions.
• November 5, US trading: The Nasdaq fell 5.52%, the S&P 500 lost 4.36% and semiconductor shares plunged.
• November 6: Indian benchmarks opened marginally higher despite heavy Asian losses, while Brent crude crossed $100 a barrel again.

A strong rally, with a weaker market beneath Friday's opening

The Sensex closed Thursday at 79,310.01, up 2,008.61 points, or 2.60%. The Nifty 50 gained 576 points, or 2.40%, to finish at 24,536.60.

Over six sessions, the Sensex added 6,063.98 points, or 8.27%, while the Nifty gained 1,837.75 points, about 8%. Their longest winning streak in a year narrowed India's earlier underperformance against other emerging markets.

Friday's opening showed less strength beyond the headline indices. The Nifty Smallcap 100 fell 0.87%, the Nifty Midcap 100 declined 0.54% and the Nifty 100 slipped 0.11%. Smaller and medium sized companies were losing ground even as the two main benchmarks remained slightly positive.

Sector movements were also uneven. Nifty IT fell 1.32%, metals lost 0.87% and public sector banks declined 0.75%, while automobiles edged up 0.10%. Foreign purchases can support the broad market while individual industries remain vulnerable to changes in global demand, costs and investor confidence.

The recovery still left substantial losses for the year. After Thursday's close, the Nifty remained down 6.1% in 2026 and the Sensex was down 6.9%.

Why the AI retreat could redirect investment

India missed much of the enthusiasm surrounding listed chipmakers and companies building AI infrastructure because it has relatively few large stock market businesses directly tied to that spending. Investors are now reconsidering the prices of those global technology shares and the profits needed to justify them.

Uday Kotak, founder of Kotak Mahindra Bank, said borrowing to finance AI ambitions had contributed to excessive valuations in some companies. Speaking in a virtual address ahead of Diwali, he described how a reversal could affect India.

And India, as it works down the path of building its own AI capability, will also benefit for reverse flow, should it happen.

His argument is that funds reducing their concentration in expensive AI investments may seek other markets with improving earnings and more attractive prices. Over the recent recovery period, Indian equities rebounded nearly 10% from early October lows while technology heavy Asian markets fell more than 7%.

A comparison for the third quarter of India's fiscal year through the reporting date showed the Nifty rising 8.5% while the MSCI Asia Pacific index fell 7.6%, a gap of 16.1 percentage points. Investors were already rewarding the two markets very differently.

Wall Street's losses bring a second kind of pressure

The Nasdaq Composite fell 5.52% on Thursday to about 24,315, taking it more than 10% below its record from the previous month. A fall of at least 10% from a recent peak is commonly called a market correction.

The S&P 500 dropped 4.36% to 7,353.73, while the Dow Jones Industrial Average lost 1,833.06 points, or 3.44%, to close at 51,523.06. The Philadelphia Semiconductor Index plunged 12.2%, reflecting particularly heavy selling among chip companies.

Investors were concerned that the Democratic Party's sweeping US midterm election victory could bring tighter scrutiny of AI infrastructure and slower data centre expansion. High borrowing costs, doubts about returns on enormous investment programmes, and opposition to the electricity and water demands of data centres added to the pressure.

Data centres house the computers needed to train and run AI systems. Slower construction can affect chip suppliers and businesses providing electrical equipment, cooling systems and building materials. The market concern therefore extends beyond the companies developing AI software.

India faces two opposing forces. A shift away from expensive technology shares may attract foreign money, while a broad global retreat from stocks can encourage funds to reduce investments across many countries. Friday's early trading showed Indian benchmarks holding up better than several Asian peers, with weakness still visible across much of the domestic market.

Oil and the rupee remain central to the recovery

Brent crude settled at $94.62 a barrel on Wednesday after an 8.7% daily decline, taking its fall for the week to around 16%. Investors linked the decline to hopes that the US election outcome would increase pressure for an easing of the Iran conflict.

India imports most of the oil it consumes. Cheaper crude reduces the amount of foreign currency needed to pay for imports and can lower costs for transport and businesses. It can also ease inflation and pressure on the current account, which records trade and other income flows between India and the rest of the world.

Friday's rebound above $100 threatened those benefits. Continued uncertainty over the conflict meant that the oil price supporting the stock market recovery was changing quickly.

The rupee had strengthened alongside foreign buying, reaching 94.47 per dollar on Thursday after gaining 17 paise. It had closed at 94.58 on Wednesday. Foreign investors buying Indian shares can support the currency when they exchange dollars for rupees.

The Reserve Bank of India also introduced a special dollar window for public sector oil marketing companies to meet their foreign exchange requirements. That arrangement gives major oil importers a dedicated route for obtaining dollars and helps manage their demand in the currency market.

Earnings are improving, but India still commands a premium

The Nifty traded at 17.5 times estimated earnings for the next 12 months, down from 21 times at the start of the year. This measure compares share prices with the profits companies are expected to earn. On those figures, the valuation multiple had fallen by about 16.7%.

The MSCI Asia Pacific index traded at about 10 times expected earnings. India's multiple was therefore still approximately 75% higher, even after its decline. Investors paying that premium are relying on stronger profit growth to support it.

Anand Gupta, lead portfolio manager for India equity at Allianz Global Investors, identified three reasons for renewed interest.

In our view, accelerating earnings, below-average valuations and low foreign ownership make India an attractive opportunity,

Nomura's analysis of 134 companies in its BSE 200-plus universe put normalised profit after tax growth at 34% from a year earlier in the second quarter of fiscal 2027, 18% above consensus forecasts; another adjusted profit calculation put growth at 35%, with a 19% beat. Excluding oil and gas, profit growth was 29%, about 5% above expectations.

Those results give investors a reason to buy beyond changing oil prices or a retreat from AI shares. Companies earning more than expected can make their stocks more attractive even without a rise in the valuation investors assign to each unit of profit.

Tax expectations add another possible catalyst

Expectations of relief from long term capital gains tax also supported sentiment. The tax applies to profits from investments held beyond a specified period, reducing the return investors keep when they sell at a gain.

The Securities and Exchange Board of India urged the government to consider removing the tax for foreign investors, while SBI Research recommended abolition for all investor classes. Finance Minister Nirmala Sitharaman indicated that the government was open to hearing views on the issue. The proposals remained under discussion.

Siddhartha Khemka, head of research for wealth management at Motilal Oswal Financial Services, linked the improved investment climate to expectations of a more measured US approach to trade and tariffs, a weaker dollar and easing Treasury yields. Lower US bond yields can make investments elsewhere more appealing by reducing the return available from holding American government debt.

The next test is whether corporate profits and continued foreign purchases can support Indian shares while oil prices and global technology markets remain volatile. Kotak recommended an approach focused on quality companies and risk management over a medium period, rather than decisions driven by daily market moves.

Key Points

• Provisional exchange data showed net foreign purchases of 14,796 crore rupees on November 5, the largest daily total since February 2021.
• The Sensex gained 8.27% over six sessions, while the Nifty rose about 8%; both remained lower for 2026.
• Indian benchmarks opened slightly higher on November 6 despite steep losses across major Asian markets.
• Improving earnings, lower valuation multiples and reduced enthusiasm for global AI stocks supported India's appeal.
• Brent crude's return above $100 threatened relief for India's import bill, business costs and inflation.
• Foreign buying figures varied across market tallies, and proposed capital gains tax relief remained under discussion.