FII buying at 5-year high, Nifty profits up 22% and valuations ease: Is India's bull market back?

Foreign investors are returning to Indian equities, corporate earnings are showing strong growth, and stock market valuations have become more reasonable. With three key indicators turning favourable together, market experts believe Indian equities could be entering a stronger phase after nearly two years of uncertainty.

Is the Indian stock market preparing for another bull run? A sharp return of foreign institutional investors (FIIs), stronger-than-expected corporate earnings and relatively attractive valuations are raising hopes of a sustained recovery in Indian equities.

Krishna Appala, Portfolio Manager at Capitalmind, believes three important factors are aligning in favour of Indian markets for the first time in nearly two years.

"We are seeing a possible regime shift over the last week or two. The narrative for FIIs seems to have flipped from ‘Anywhere but India’ to ‘India, the safe haven’. Too early to say if it sustains, but it is a welcome change," Appala said.

1. FIIs are returning to Indian stocks

Foreign portfolio investors (FPIs) purchased ₹60,698 crore worth of Indian equities in just seven trading sessions in November, according to Appala.

This marked the highest net buying over any seven consecutive trading days since January 2021, signalling a sharp reversal in foreign investor sentiment.

However, the bigger picture remains challenging. Capitalmind's data shows foreign investors were still net sellers of approximately ₹3.82 lakh crore in 2026, even after November's inflows.

Much of the recent buying has also been concentrated in large-cap stocks, suggesting the recovery is not yet broad-based.

2. Corporate earnings are growing strongly

The second positive signal comes from India Inc's September-quarter earnings.

According to Capitalmind data as of November 10, median profit after tax (PAT) growth for Nifty 50 companies stood at 22.3%, while median revenue growth reached 17.4%.

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For Nifty 500 companies, median profit growth was 20.4%, against revenue growth of 18.6%.

These figures indicate that companies have maintained profitability despite elevated crude oil prices, geopolitical tensions and disruptions to global trade.

Strong earnings matter because share prices ultimately depend on how much profit businesses generate.

3. Stock valuations look more reasonable

The third encouraging factor is valuation.

The Nifty 50 currently trades at approximately 18 times its expected earnings over the next 12 months, compared with its five-year median of 20.8 times.

Similarly, the Nifty Midcap 150 trades at around 25 times forward earnings, below its historical median of 30 times.

However, the Nifty Smallcap 250 trades at 29 times, slightly above its five-year median of 28.3 times.

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This suggests large-cap and mid-cap stocks are relatively cheaper compared with their own historical valuations, although that does not necessarily make every stock inexpensive.

Is the bull market back?

Appala believes the combination of improving liquidity, healthy earnings and reasonable valuations presents an encouraging market setup.

"After two years of waiting, three things have finally turned our way at the same time, the liquidity is coming back, earnings are strong, and the valuations are still sane," he said.

However, investors should remain cautious. Global interest rates, geopolitical developments and foreign capital movements could still trigger volatility.

For retail investors, the improving outlook supports disciplined, long-term investing rather than aggressively chasing short-term market rallies.

The three indicators suggest conditions are improving, but a sustained bull market will require continued earnings growth and consistent foreign investment.

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