FPIs reverse four-month selling trend with ₹20,200 crore inflow in July

After four straight months of selling, foreign investors turned net buyers of Indian equities in July, pumping in ₹20,200 crore, aided by attractive valuations, improving corporate earnings, and easing global headwinds.

The latest inflow marks a sharp reversal from the preceding months when Foreign Portfolio Investors (FPIs) withdrew ₹49,340 crore in June, ₹32,963 crore in May, ₹60,847 crore in April, and a massive ₹1.17 lakh crore in March, according to data from the Central Depository Services (India) Ltd (CDSL).

Prior to the four-month selling spree, FPIs had invested ₹22,615 crore in Indian equities in February.

Despite the turnaround in July, foreign investors have pulled out a net ₹2.54 lakh crore from Indian equities so far in 2026, way more than the ₹1.66 lakh crore withdrawn during the whole of 2025.

Market experts attributed the renewed foreign investor interest to relatively stable domestic markets, reasonable large-cap valuations, improving earnings prospects, and a more favourable global environment.

V.K. Vijayakumar, chief investment strategist at Geojit Investments, said excessive volatility in markets such as South Korea and Taiwan, coupled with concentration risk in the “chip trade”, had prompted FPIs to look for relatively stable markets like India.

The stability of the rupee and fair valuations of India’s large-cap stocks were other factors facilitating renewed FPI inflows into the country, he added.

‘Improving earnings prospects’

Vedant Gupte, co-founder and CEO of investment platform Trackk, said improving earnings prospects also strengthened investor sentiment, with June quarter results showing signs of recovery across key sectors.

IT stocks, in particular, witnessed a sharp re-rating as better-than-expected earnings helped ease concerns over the impact of artificial intelligence on the sector’s growth prospects, he said.

At the same time, easing pressure from the U.S. dollar and expectations that U.S. interest rates were near their peak had improved the investment environment for emerging markets, Mr. Gupte added.

Foreign investor interest was not limited to equities, with the debt market continuing to attract significant inflows during the month.

FPIs invested ₹29,212 crore in debt through the general route and another ₹3,033 crore through the fully accessible route in July.

Going forward, the trajectory of foreign flows is likely to be influenced by both global developments and domestic triggers.

Pabitro Mukherjee, deputy vice president (Research) at Bajaj Broking, said investors in the coming month would closely track crude oil price movements and developments in the ongoing U.S.-Iran geopolitical tensions.

On the domestic front, the Q1FY27 earnings season and the RBI’s monetary policy scheduled for August 5 would remain in focus, he added.