FPIs reverse recent selling, record net inflows in July as sentiment improves

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.

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have pulled out a net ₹2.54 lakh crore from Indian equities so far in 2026, way more than the ₹1.66 lakh crore withdrawn during the whole of 2025

After four straight months of selling, foreign investors turned net buyers of Indian equities in July, pumping in Rs 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 Rs 49,340 crore in June, Rs 32,963 crore in May, Rs 60,847 crore in April and a massive Rs 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 Rs 22,615 crore in Indian equities in February.Despite the turnaround in July, foreign investors have pulled out a net Rs 2.54 lakh crore from Indian equities so far in 2026, way more than the Rs 1.66 lakh crore withdrawn during the whole of 2025.Market experts attributed the renewed foreign investor interest to relatively stable domestic markets, reasonable large-cap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", is prompting FPIs to look for relatively stable markets like India.The stability of the rupee and fair valuations of India's large-cap stocks are other factors facilitating renewed FPI inflows into the country, he added.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 US dollar and expectations that US interest rates are near their peak have improved the investment environment for emerging markets, Gupte added.Foreign investor interest was not limited to equities, with the debt market continuing to attract significant inflows during the month.FPIs invested Rs 29,212 crore in debt through the general route and another Rs 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 will closely track crude oil price movements and developments in the ongoing US-Iran geopolitical tensions.On the domestic front, the Q1FY27 earnings season and the RBI's monetary policy scheduled for August 5 will remain in focus, he added.

Mumbai: Foreign institutional investor (FII) selling in Indian equities continued to slow in July, signalling a gradual improvement in overseas investor confidence. According to provisional exchange data, net FII outflows fell sharply to Rs 5,780 crore in July, the lowest monthly outflow recorded in 2026.The latest figures show a steady decline in selling pressure over the past five months. Net outflows reduced from Rs 1,22,540 crore in March to Rs 70,140 crore in April, Rs 55,960 crore in May, Rs 49,030 crore in June, and finally Rs 5,780 crore in July.Buying Returns In Final WeekMarket experts said the sharp moderation in FII selling reflects improving sentiment towards Indian equities.According to Pabitro Mukherjee, Deputy Vice President – Research at Bajaj Broking, overseas investors turned net buyers during several trading sessions in the final week of July. FIIs made net purchases of Rs 5,950 crore during the week, marking a notable shift after months of sustained selling.The return of foreign buying indicates growing confidence in India's economic fundamentals and corporate earnings outlook.DIIs Continue To Provide SupportDomestic institutional investors (DIIs) remained strong buyers throughout 2026, helping absorb foreign selling.Q1 FY27 Earnings To Set Market Tone, Crude Oil Prices, FII Flows And West Asia Developments To Drive Dalal Street Next WeekIn July alone, DIIs invested Rs 35,100 crore in Indian equities. During the last week of the month, they purchased shares worth Rs 5,390 crore, providing steady support to the market.Analysts believe consistent domestic inflows have played an important role in keeping equity markets resilient despite global uncertainty.Markets Stay PositiveAccording to Vinit Bolinjkar, Head of Research at Ventura, the benchmark Nifty 50 ended the week at 24,366, supported by improving foreign flows and continued domestic buying.Stock Markets End Lower As US-Iran Tensions, ₹2,125 Crore FII Outflows Weigh On Investor SentimentHe noted that while the USD/INR remained around 95.42 and Brent crude traded near USD 87 per barrel, investors should continue monitoring imported inflation risks.Looking ahead, market participants will closely watch crude oil prices, the ongoing US-Iran geopolitical situation and foreign investment trends. Analysts believe the near-term outlook for Indian equities remains constructive, backed by healthy earnings growth, improving liquidity and sustained institutional participation.