Foreign portfolio investors (FPIs) returned to Indian equities in July, injecting Rs 20,200 crore after four consecutive months of selling, according to Business Today. The reversal was driven by attractive valuations, improving corporate earnings and a better global investment environment, the report said.
The equity comeback in numbers
According to data from the Central Depository Services (India) Ltd (CDSL), the July inflow followed substantial outflows. FPIs pulled out Rs 1.17 lakh crore in March, Rs 60,847 crore in April, Rs 32,963 crore in May and Rs 49,340 crore in June. Before the selling spree, they had invested Rs 22,615 crore in February.
| Month | FPI net flow in Indian equities |
|---|---|
| February 2026 | + Rs 22,615 crore |
| March 2026 | - Rs 1,17,000 crore |
| April 2026 | - Rs 60,847 crore |
| May 2026 | - Rs 32,963 crore |
| June 2026 | - Rs 49,340 crore |
| July 2026 | + Rs 20,200 crore |
Despite the July inflows, foreign investors remain net sellers for the year. They have withdrawn a total of Rs 2.54 lakh crore from Indian equities so far in 2026, much higher than the net outflow of Rs 1.66 lakh crore recorded during the whole of 2025, according to Business Today.
Why FPIs came back
Market experts said that a combination of domestic resilience and improving global conditions helped revive foreign investor interest. Factors supporting the inflow include:
- Excessive volatility in markets such as South Korea and Taiwan, along with concentration risk in the "chip trade", pushing FPIs towards relatively stable markets such as India, according to V K Vijayakumar, chief investment strategist at Geojit Investments.
- Stability of the rupee and fair valuations of India's large-cap stocks, also cited by Vijayakumar.
- Improving earnings outlook, with June quarter results indicating a recovery across key sectors, according to Vedant Gupte, co-founder and CEO of investment platform Trackk.
- A sharp re-rating in IT stocks after better-than-expected earnings, easing concerns over the impact of artificial intelligence on the sector's growth prospects, Gupte said.
- Easing pressure from the US dollar and expectations that US interest rates are close to peaking, which have made emerging markets more attractive, Gupte added.
Excessive volatility in markets such as South Korea and Taiwan, along with concentration risk in the "chip trade", is encouraging FPIs to shift towards relatively stable markets such as India. — V K Vijayakumar, chief investment strategist, Geojit Investments
Debt market also sees strong foreign interest
The renewed appetite for Indian assets extended beyond equities. During July, FPIs invested Rs 29,212 crore in the debt market through the general route and another Rs 3,033 crore through the fully accessible route, indicating continued interest in Indian debt instruments alongside equities, Business Today reported.
What to watch next
The direction of foreign investment in the coming weeks is expected to depend on both overseas developments and domestic events. Pabitro Mukherjee, deputy vice president-research at Bajaj Broking, said investors will closely monitor crude oil prices and developments in the ongoing US-Iran geopolitical tensions. Domestically, attention will remain on the Q1FY27 earnings season and the Reserve Bank of India's (RBI) monetary policy decision scheduled for August 5, he added.
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