Foreign Portfolio Investors (FPIs) became net buyers of Indian equities in July, pumping in ₹20,200 crore (approximately $2.42 billion) after four consecutive months of selling. This turnaround was attributed to attractive valuations, improving corporate earnings, and easing global headwinds. Despite this inflow, FPIs have withdrawn a net ₹2.54 lakh crore from Indian equities so far in 2026, significantly more than the ₹1.66 lakh crore pulled out during all of 2025.
Prior to July, FPIs had seen substantial outflows, including ₹49,340 crore in June, ₹32,963 crore in May, ₹60,847 crore in April, and a massive ₹1.17 lakh crore in March. Before this selling spree, they had invested ₹22,615 crore in February. Market experts like V K Vijayakumar of Geojit Investments and Vedant Gupte of Trackk cited stable domestic markets, reasonable large-cap valuations, improving earnings prospects, and a more favorable global environment as key drivers for the renewed interest.
IT stocks, in particular, experienced a sharp re-rating due to better-than-expected earnings, which helped alleviate concerns about AI's impact on the sector's growth. The Nifty IT index gained 17% in July. Furthermore, FPIs also showed significant interest in the debt market, investing ₹29,212 crore through the general route and an additional ₹3,033 crore via the fully accessible route in July. Easing pressure from the US dollar and expectations of US interest rates nearing their peak also made emerging markets like India more appealing. Chris Wood of Jefferies suggested that the return to India was partly a rotation away from the AI trade that had dominated markets in South Korea and Taiwan.
