FPIs return to Indian equities in August

Foreign Portfolio Investors (FPIs) have resumed buying Indian equities in August 2026, investing Rs 23,544 crore by August 23, following a Rs 20,200 crore inflow in July. This marks a sharp turnaround after four consecutive months of heavy selling, during which FPIs withdrew Rs 1.17 lakh crore in March, Rs 60,847 crore in April, Rs 32,963 crore in May, and Rs 49,340 crore in June. Despite the recent inflows, FPIs remain net sellers in 2026, with cumulative outflows of about Rs 2.4 lakh crore, exceeding the Rs 1.66 lakh crore outflow for all of 2025. The buying is attributed to improving relative valuations, resilient corporate earnings, expectations of US rate cuts, softer crude prices, and a stable rupee. FPIs are selectively buying mid-caps and sectors linked to domestic consumption such as consumer durables, healthcare, and automobiles. Foreign interest has also extended to the debt market, with inflows through the Fully Accessible Route and general route. Market experts note that the reversal is driven by global macro factors rather than a deterioration in India's fundamentals, and flows remain sensitive to US Treasury yields, the dollar index, crude oil prices, and geopolitical developments, particularly US-Iran tensions.