Global Rally Boosts Indian Open Despite FII Caution

Bassyonni

Published: February 25, 2026 9:40 PM ET

Indian markets are set for a positive opening, significantly influenced by recent trends in global equities. Strong performances on Wall Street and gains in Asian markets have contributed to a favourable outlook.

Global Rally Boosts Indian Open Despite FII Caution

The GIFT Nifty futures indicated an optimistic start near 25,645 on February 26, 2026. After a robust session in the U.S., the Dow Jones rose by 0.63%, the S&P 500 increased by 0.81%, and the Nasdaq Composite climbed by 1.26%. This momentum extended to Asian markets, with Japan’s Nikkei 225 hitting a historic high of 59,199.31, up 1.1%.

Diverging Institutional Flows

Despite the global positivity, the investment patterns of institutional investors reveal a mixed picture. On February 24, foreign institutional investors (FIIs) sold Indian equities worth approximately ₹103 crore. In contrast, domestic institutional investors (DIIs) made significant net purchases, acquiring shares worth ₹3,161 crore during the same period.

FIIs: Net selling of ₹103 crore.
DIIs: Net buying of ₹3,161 crore.

This stark divergence points to foreign investors’ caution, while domestic institutions appear optimistic about long-term valuations. Sectors such as primary resources and infrastructure witnessed notable strength, with mining stocks increasing by 2.93% and non-ferrous metals rising by 2.91%.

Commodity Prices and Market Sentiment

Commodity prices have shown slight gains, with West Texas Intermediate crude oil increasing by 0.31% to about $65.62 per barrel. Brent crude rose by 0.30% to around $71.06. Analysts report that gold is trading at around $5,162 per ounce internationally, and domestic gold futures for April 2026 hover near ₹1,61,242 per 10 grams.

Despite these upward trends, the Indian rupee has seen a marginal depreciation of 0.01% against the dollar, closing at 90.95 on February 25. Analysts expect domestic inflows and sector focus on manufacturing and infrastructure to support the market, even amid global uncertainties.

Challenges Ahead

However, the persistent net selling by FIIs raises concerns. Historically, sustained foreign outflows can pressure market liquidity and currency stability. While DIIs have offset some selling, their ability to sustain this over time remains uncertain.

Rising crude oil prices also pose a potential risk for India, increasing import bills and inflation, which may impact the rupee and corporate margins. The underperformance of certain business groups suggests underlying weaknesses not fully reflected in overall sector performance.

Future Outlook

Market participants will closely watch global economic developments. Changes in central bank policies and significant economic data releases could shift investor sentiment. For India, the balance between domestic institutional buying and foreign investor caution will be crucial moving forward.

Monitoring key commodity sectors, oil price trajectories, and currency movements will be essential. A shift in FII sentiment could dramatically change the current optimistic outlook of the markets.

Disclaimer: This content serves informational purposes and should not be construed as investment advice. Consult a financial advisor before making investment decisions.