- After four straight months of selling, foreign institutional investors (FIIs) turned net buyers in Indian equities in July, recording $2.31 billion in net investments.
- 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.
- Despite the July turnaround, foreign investors have pulled out a net ₹2.54 lakh crore from Indian equities so far in 2026, more than the ₹1.66 lakh crore withdrawn during the whole of 2025.
- Market experts attributed the renewed FPI interest to relatively stable domestic markets, reasonable large-cap valuations, improving earnings prospects, and a more favourable global environment.
- Independent market expert Ambareesh Baliga attributed the shift to softening global inflation and central bank rate cuts, while warning that the trend remains vulnerable to crude oil price spikes and changes in global bond yields.
Foreign institutional investors (FIIs) returned to Indian equities in July, marking a significant turnaround after four months of net selling. They recorded net investments of $2.31 billion, the highest monthly buying since June 2025, driven by attractive valuations and improving corporate earnings.1
Before this rebound, FIIs had pulled out over $26.41 billion from March to June, with withdrawals peaking at ₹1.17 lakh crore in March alone. The July inflow was supported by strong participation in primary issuances, with $1.25 billion invested in the primary equity market, extending their buying streak to 34 consecutive months.2
Market expert Ambareesh Baliga noted, “Softening global inflation indicators and shifting central bank rate cuts prompted macro funds to pivot back to highly stable emerging market equities.” Despite geopolitical tensions and crude oil prices nearing $100 per barrel, Indian equity markets ended July higher, with the benchmark Sensex and Nifty gaining 2 percent each.5
Feroze Azeez, Joint CEO of Anand Rathi Wealth Limited, stated, “We expect strong FPI inflows driven by robust macroeconomic fundamentals.” The upcoming MSCI Emerging Markets index rebalancing is also anticipated to increase India's weightage, further attracting foreign investments.
In addition to equities, FIIs invested ₹29,212 crore in debt markets, indicating a broader interest in Indian financial assets. The trajectory of foreign flows will depend on global developments and domestic factors, including the upcoming Q1FY27 earnings season and the RBI's monetary policy meeting.
“FIIs invested $1.25 billion in primary issues, extending a 34-month buying streak, and $1.06 billion in secondary markets. Despite the turnaround, foreign investors have pulled out a net ₹2.54 lakh crore from Indian equities so far in 2026.”
