Foreign portfolio investors (FPIs) returned to net buying in Indian equities in August, investing Rs 16,621 crore in the first fortnight of the month, according to Business-Today. The inflow follows Rs 20,200 crore of FPI buying in July and marks a reversal of the heavy selling that dominated the first half of 2026. The shift comes amid improving relative valuations, resilient corporate earnings and growing expectations of lower interest rates in the United States, the report said.
August inflows and year-to-date position
The two consecutive months of buying have trimmed but not erased the year's outflows. FPIs remain net sellers in 2026, with cumulative withdrawals of about Rs 2.4 lakh crore so far this year, Business-Today reported, citing CDSL data. That year-to-date figure already exceeds the Rs 1.66 lakh crore that foreign investors pulled out of Indian equities during the whole of 2025.
Monthly flow reversal
The table below shows the monthly trajectory of FPI equity flows as reported by Business-Today.
| Month | FPI equity flow |
|---|---|
| February | Rs 22,615 crore (inflow) |
| March | Rs 1.17 lakh crore (outflow) |
| April | Rs 60,847 crore (outflow) |
| May | Rs 32,963 crore (outflow) |
| June | Rs 49,340 crore (outflow) |
| July | Rs 20,200 crore (inflow) |
| August (first fortnight) | Rs 16,621 crore (inflow) |
What is driving the buying
Experts quoted in the report attributed the turnaround to a combination of factors: valuations relative to other markets, steady corporate earnings, expectations of US rate cuts, softer crude prices and reduced currency volatility. Manish Bhandari, CEO and portfolio manager at Vallum Capital, told PTI:
"The key drivers are improving relative valuations, resilient corporate earnings, expectations of softer US rates, lower currency volatility and some diversification away from crowded Korea-Taiwan AI trades. AI became a magnet of all capital across the world."
Vedant Gupte, co-founder and CEO of investment platform Trackk, said the earlier selling was driven more by global macroeconomic factors than India-specific concerns. "Expectations of US rate cuts, softer crude and a rupee that has stopped misbehaving have removed the three reasons foreign investors had to stay away," Gupte said.
Selective buying pattern
The buying has become more selective, with flows concentrating in sectors tied to domestic consumption. According to Gupte, consumer durables and healthcare are attracting interest. "Foreign investors are underwriting the Indian household, not the Indian invoice," he said.
July's sectoral data showed strong FPI buying in:
- Consumer Services
- Healthcare
- Consumer Durables
- Metals & Mining
- IT
Several other sectors continued to see net selling, Business-Today reported.
Debt flows and risks ahead
Foreign investors also continued to put money into Indian debt during the period under review, investing Rs 972 crore through the Fully Accessible Route (FAR) and Rs 69 crore through the general route, the report said.
The buying trend remains vulnerable to shifts in global market conditions. Business-Today said FPI flows are expected to remain sensitive to US treasury yields, the dollar index, crude oil prices and changes in corporate earnings expectations. Pabitro Mukherjee, deputy vice president-research at Bajaj Broking, flagged crude oil prices and developments related to the ongoing US-Iran geopolitical tensions as key factors investors will track in the coming week.
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