Foreign portfolio investors have significantly boosted Indian equities with a Rs 30,919 crore infusion in August, marking a second consecutive month of net buying driven by improving corporate earnings, resilient economic activity, and a stable rupee.
Illustration: Dominic Xavier/Rediff
Key Points
- Foreign portfolio investors (FPIs) infused Rs 30,919 crore into Indian equities in August, extending their buying streak to a second consecutive month.
- This inflow follows Rs 20,200 crore invested in July, signalling a potential turnaround after four months of heavy selling.
- Key drivers for FPI inflows include improving corporate earnings, resilient economic activity, a stable rupee, and easing geopolitical concerns.
- Despite recent inflows, FPIs remain net sellers in Indian equities for 2026, with withdrawals totalling Rs 2.23 lakh crore so far.
- Future FPI movements will be influenced by Brent crude prices, US-Iran tensions, US-Canada trade relations, and upcoming US inflation and Federal Reserve policy decisions.
Foreign portfolio investors (FPIs) infused Rs 30,919 crore in Indian equities in August, extending their buying streak to a second straight month, amid improving corporate earnings, resilient economic activity, stable rupee and easing geopolitical concerns.
The inflow follows Rs 20,200 crore invested in July, marking a sharp turnaround after four consecutive months of heavy selling.
FPI Investment Trends
FPIs had withdrawn Rs 49,340 crore in June, Rs 32,963 crore in May, Rs 60,847 crore in April and a massive Rs 1.17 lakh crore in March.
Prior to the selling streak, they had invested Rs 22,615 crore in February, according to CDSL data.
The two straight months of buying, following the worst six-month stretch in years, offer the first indication of a possible trend reversal.
However, foreign investors remain net sellers in Indian equities in 2026, with withdrawals of Rs 2.23 lakh crore so far.
This is higher than the Rs 1.66 lakh crore outflow recorded during the entire 2025.
Factors Driving Inflows
“The important factors driving the FPI flows into India are the reversal of the chip trade, the stability in the rupee and, more importantly, the improving earnings growth in India,” V K Vijayakumar, Chief Investment Strategist, Geojit Investments, said.
The continuation of foreign buying in August was supported by improving domestic fundamentals as well as a relatively favourable global backdrop.
“Corporate earnings showed signs of improvement during the June quarter, helping ease concerns around the earnings slowdown that had weighed on foreign investor sentiment earlier.
“Resilient economic activity and strengthening credit growth also reinforced confidence in India’s medium- to long-term growth prospects,” Himanshu Srivastava, Principal, Manager Research, Morningstar Investment Research India, said.
Global factors also turned relatively supportive during parts of the month.
Easing geopolitical concerns aided risk sentiment, while expectations of softer US interest rates and a rotation of global capital away from the crowded AI and semiconductor trade in markets such as Korea and Taiwan created room for incremental allocations towards India, he added.
Challenges and Outlook
However, tensions in West Asia and uncertainty over crude oil prices continued to remain an overhang.
“Cash flows suggest returning conviction; futures suggest lingering caution.
“The trend may be turning, post AI and war-related worries receding,” Manish Bhandari, CEO and Portfolio Manager, Vallum Capital, said.
Going ahead, investors will closely monitor movements in Brent crude prices and developments surrounding US-Iran tensions.
Escalating US-Canada trade tensions could further add to market uncertainty and keep investors cautious, Pabitro Mukherjee, deputy vice president-Research, Bajaj Broking, said.
Elevated US bond yields also remain a key concern, with markets awaiting upcoming inflation data ahead of the Federal Reserve’s policy meeting in mid-September.
On the domestic front, Q1 GDP growth and inflation data will remain key indicators to watch for institutional flows, he added.
Foreign investor interest also extended to the debt market. They invested Rs 627 crore through the Fully Accessible Route (FAR) and Rs 289 crore through the Voluntary Retention Route (VRR).
However, they pulled out Rs 2,318 crore through the general route.
