Foreign Buying Lifts Indian Stocks as Global AI Selloff Sends Money Toward Banks and Blue Chips

Nifty tops 25,000 as overseas money returns

India's Nifty 50 closed above 25,000 on November 6, 2026, for the first time since February 27, as renewed foreign buying lifted major banks and other heavyweight shares while technology stocks tumbled across global markets. The Sensex gained 1,718.01 points, or 2.17%, to 81,028.02, and the Nifty rose 493.75 points, or 2.01%, to 25,030.35.

Foreign investors have poured roughly $5 billion into Indian equities over five trading sessions, reversing months of selling. Geojit Investments chief investment strategist V K Vijayakumar put purchases over five sessions at Rs 35,781 crore. Provisional exchange data showed nearly Rs 15,000 crore of net buying on Thursday, November 5, alone. Net buying means purchases exceeded sales by that amount.

The turnaround brings together several changes: stronger corporate profits, falling crude prices, a firmer rupee and investors cutting crowded bets on artificial intelligence. India's limited exposure to the companies supplying AI chips and data centres, previously a disadvantage, is attracting renewed attention.

The gains are concentrated, however. On Friday, the Nifty Midcap 100 slipped 0.02% and the Nifty Smallcap 100 fell 0.82%, even as the benchmark Nifty advanced more than 2%. Investors holding smaller companies experienced a very different market from those owning large banks.

India also entered this rebound with substantial damage to repair. Foreign investors had sold more than $31 billion through October, according to National Securities Depository Limited figures, and Indian shares were still heading toward their first annual decline in 11 years.

How quickly has the market turned?

The Nifty climbed from 22,600 on October 23 to 25,030 on November 6, a gain of 2,430 points, or 10.75%, across 10 trading sessions. Friday extended its winning run to seven sessions, with the index gaining about 8.58% over the week.

The recent sequence shows how sharply sentiment changed:

• Through October: Foreign investors had sold more than $31 billion of Indian equities, according to NSDL figures.
• October 23: The Nifty closed at 22,600, the starting point for its subsequent rally of nearly 11%.
• November 5: Provisional exchange data showed nearly Rs 15,000 crore in net foreign purchases, while the Sensex rose 2.6%.
• November 6: The Nifty closed at 25,030.35 and the Sensex at 81,028.02, despite sharp losses elsewhere in Asia.
• November 8: A special Muhurat trading session associated with Diwali was scheduled.

Foreign buying has also been accompanied by a retreat from bearish bets. Short positions on National Stock Exchange index futures fell by more than 100,000 contracts during the week. A short position benefits when prices fall; closing it can add buying pressure during a rebound.

Why the AI selloff is helping India

The Nasdaq fell about 5.5% overnight as investors reassessed the scale and financing of AI investment. Japan's Nikkei dropped nearly 7%, while South Korea's Kospi fell more than 9%. Companies supplying chips, memory and investment capital for the AI boom were among the hardest hit.

Nvidia fell 9.3%, Samsung Electronics nearly 10%, SK Hynix about 12% and Japan's Kioxia 14%. Taiwan Semiconductor Manufacturing Co. dropped as much as 8.5%. The concern running through these businesses is straightforward: slower construction of data centres could mean fewer orders for chips, electricity infrastructure and related equipment.

Indian benchmarks have much less direct exposure to that supply chain than markets in South Korea and Taiwan. Financial services, consumption, energy, industrials and other services play larger roles. Money leaving AI hardware shares therefore has a sizeable alternative market in India.

Rajiv Batra, head of Asia and co-head of global emerging markets equity strategy at JPMorgan, described how investors reducing concentrated technology positions were viewing the country:

"India has emerged as an 'AI hedge' for portfolios trimming or diversifying out of crowded AI trades," Batra said.

A hedge is an investment intended to reduce exposure to a particular risk. Here, investors are seeking businesses whose earnings depend less directly on continued spending on AI infrastructure.

Uday Kotak, founder of Kotak Mahindra Bank, also pointed to the borrowing behind the investment boom. In a virtual address before Diwali, he said:

"The kind of leverage which global companies are taking to fund their AI aspiration is also leading to significant overvaluation in many cases," Kotak said.

Borrowing increases the pressure on companies to earn enough from their investments to cover financing costs. Doubts about those future returns can quickly change what investors are willing to pay for shares.

Corporate profits give buyers another reason to return

Kotak Institutional Equities calculated that net profits at Nifty 50 companies that had reported results for the second quarter rose 19% from a year earlier, beating its estimates by 4%. Across the brokerage's wider coverage, profits grew 18% and exceeded expectations by 3%.

JPMorgan's broader measure showed earnings growth at listed Indian companies tracking above 20%. Its figures also showed consensus earnings per share estimates rising 0.5% for 2026 and 0.6% for 2027 over the preceding month. Earnings per share divides a company's profit by its number of shares, allowing investors to compare profits with the share price.

Citigroup found that profit growth at roughly two-thirds of BSE 100 companies that had reported was the fastest in at least five quarters and exceeded forecasts. Together, the figures show an improvement extending beyond a handful of headline results.

Timothy Moe, chief Asia-Pacific equity strategist and co-head of Asia macro research at Goldman Sachs, highlighted India's domestic demand. Spending and investment within India give many listed businesses a different source of growth from companies relying heavily on the global AI construction cycle.

Lower oil and a stronger rupee change the calculation

Falling crude prices are helping an economy that buys substantial quantities of oil from abroad. Nomura said cheaper crude could reduce pressure on inflation, the import bill and the current account, which tracks trade and other income flows between India and the rest of the world.

The rupee strengthened as much as 0.4% to 94.0675 per dollar on Friday, its strongest level since April. The dollar's exchange rate against the rupee also fell below its average for the previous 200 trading days for the first time since 2025, a measure traders use to assess longer trends.

Currency movements matter directly to foreign shareholders. An overseas investor buying Indian shares must eventually translate their value back into dollars or another currency. A falling rupee can erode a gain in share prices; a stable or rising rupee helps preserve it.

Vinod Nair, head of research at Geojit Investments, cited falling crude, easing US Treasury yields, a firmer rupee and foreign inflows as mutually supportive forces. Lower Treasury yields can make returns available elsewhere more attractive relative to US government debt.

Anindya Banerjee, head of research for commodity and currency derivatives at Kotak Neo, tied the currency's prospects to the conflict in West Asia. He said favourable conditions for the rupee could continue unless the war escalates again. Oil and currency conditions therefore remain closely connected to geopolitical developments.

Why many personal portfolios are lagging

SAMCO Securities data show the scale of the gap between large and small companies. Over the preceding month, the Nifty Top 10 Equal Weight Index gained 10.64%. The Nifty Midcap 150 and Nifty Smallcap 250 each fell 2.74%, while the Nifty Microcap 250 dropped 5.32%.

The gap between the top 10 index and the smallcap index was 13.38 percentage points. A portfolio concentrated in smaller companies could therefore lose value during a period when the most prominent stocks were rising strongly.

Apurva Sheth, head of market perspectives and research at SAMCO Securities, explained the frustration among investors watching the benchmark rally:

"Lot of investors are scratching their head thinking why their portfolio isn't moving up with Nifty. The simple answer is you don't own what is moving up," Sheth said.

ICICI Bank and Infosys each gained about 16% over the month, while Bharti Airtel rose 14.61%. Kotak Mahindra Bank advanced 10.08%, HDFC Bank 10%, Larsen & Toubro 9.02% and Reliance Industries 8.44%, according to SAMCO's analysis.

Large companies offer the trading volume that overseas institutions need to move substantial sums. Buyers can establish positions more easily in actively traded shares than in smaller businesses with fewer shares changing hands.

Friday's leadership followed that pattern. Private banks outperformed, while Mahindra & Mahindra, ICICI Bank and HDFC Life were the leading Nifty gainers. Indian technology services shares also attracted buying, with Nifty IT rising more than 1% during the session.

Cheaper than before, but still expensive beside peers

India's valuation picture depends on the comparison. Hari Shyamsunder, vice president and senior institutional portfolio manager of India equities at Templeton Global Investments, said the Nifty was below its average forward price to earnings ratio over 10 years. MSCI India's forward multiple in October was its lowest since 2020.

A forward price to earnings ratio compares a share price with expected future earnings. A multiple of 18.6 means investors are paying 18.6 units of price for each unit of forecast annual profit.

Bernstein put India's rolling forward multiple at 18.6, compared with 9.3 for China and 7.9 for Brazil. India was therefore trading at twice China's multiple and about 2.35 times Brazil's. Bernstein argued that India was neither an AI beneficiary nor an anti-AI trade and remained expensive relative to alternatives.

Saurabh Mukherjea, founder and chief investment officer of Marcellus Investment Managers, said cheaper ways existed to hedge AI exposure. He also described recent Indian earnings growth as strong and said valuations of some quality large companies were at their lowest in a decade.

Earlier losses explain some of the renewed interest. Even after the recent recovery, SAMCO's figures showed HDFC Bank down 21.55% for 2026, Infosys down 27.76%, ITC down 30.12% and Reliance Industries down 16.48%. For these stocks, a strong month has recovered only part of the year's decline.

What could sustain or interrupt the rebound?

JPMorgan estimated that foreign investors returning Indian holdings to a neutral portfolio weight could generate about $115 billion in net inflows. An underweight position means holding less India exposure than the benchmark against which a fund measures itself. The estimate describes a possible portfolio adjustment, with no timetable given for such purchases.

Charlie Hong, founder and chief investment officer at LOGOS Asset Management, linked the durability of India's relative performance to company results:

The trend will sustain for the medium term only if earnings continue to recover.

Market uncertainty also increased during the rally. India VIX, which measures expected Nifty volatility over the next 30 days using options prices, climbed 8.26% to 16.87, according to NSE data. Investors were paying for protection against larger price movements even as benchmark shares rose.

Ponmudi R, chief executive of Enrich Money, pointed to possible profit taking and renewed geopolitical stress, including President Donald Trump's threat to expand military strikes against Iran. A renewed rise in oil prices would put pressure back on several of the factors currently helping Indian assets.

The US jobs report scheduled for later on November 6 was another immediate event for investors watching interest rates. Beyond that release and the November 8 Muhurat session, the next rounds of corporate results will show whether profit growth continues and whether buying spreads beyond the largest companies.

Key Points

• The Nifty closed at 25,030.35 on November 6, up 2.01%, while the Sensex gained 2.17%.
• Foreign buying has reversed months of selling, with nearly Rs 15,000 crore in provisional net purchases on November 5 alone.
• Stronger profits, softer crude prices and a firmer rupee are supporting India's appeal as global AI shares fall.
• The rally remains concentrated in large companies. Midcap and smallcap benchmarks declined on Friday.
• India's valuations have fallen relative to its own history but remain above those of China and Brazil.
• Continued earnings growth and the course of the West Asia conflict are central to whether the rebound lasts.