Foreign Portfolio Investors (FPIs) have returned to the Indian stock market as net buyers in July, investing more than Rs 15,157 crore in equities so far this month, ending a four-month streak of continuous outflows, according to data from the Central Depository Services (India) Ltd (CDSL).
The renewed buying follows heavy withdrawals by overseas investors in recent months. FPIs had pulled out Rs 49,340 crore in June, Rs 32,963 crore in May, Rs 60,847 crore in April, and Rs 1.17 lakh crore in March. Prior to this selling phase, they had invested Rs 22,615 crore in Indian equities in February.
Despite the positive trend in July, foreign investors remain net sellers for 2026, with cumulative equity outflows of nearly Rs 2.6 lakh crore so far this year. This exceeds the Rs 1.66 lakh crore withdrawn during the same period in 2025.
According to Himanshu Srivastava, Principal Manager – Research at Morningstar Investment Research India, the return of foreign investments has been supported by improving global market sentiment, easing geopolitical tensions that have reduced concerns over energy prices, and growing confidence in India’s strong macroeconomic outlook.
VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said stable domestic economic indicators and the relative strength of the Indian rupee have increased the appeal of Indian equities for overseas investors. He also noted that reduced exposure to markets such as South Korea, along with weakness in the semiconductor sector, has redirected some foreign investment flows towards India.
Srivastava added that after a period of market consolidation, stock valuations have become more attractive, encouraging FPIs to selectively invest in fundamentally strong Indian companies. However, he cautioned that future inflows will depend on global economic developments and the continued resilience of India’s economy.
Foreign investors also maintained their interest in India’s debt market during July, investing Rs 6,625 crore through the Fully Accessible Route (FAR) and an additional Rs 3,228 crore via the general route.
Vijayakumar said recent tax reforms related to debt investments have enhanced the attractiveness of Indian bonds for foreign investors while also contributing to the stability of the Indian rupee.
