Foreign Investors Boost Indian Equities with Over Rs 30,900 Crore in August
Foreign investors made a notable return to Indian equities in August, investing Rs 30,919 crore. This marks a significant rebound following a challenging first half of the year, where they had withdrawn substantial amounts from the market. In July, foreign portfolio investors (FPIs) had already invested Rs 20,200 crore, indicating a shift in sentiment.
The inflows in August follow a period of aggressive selling, with FPIs withdrawing Rs 49,340 crore in June, Rs 32,963 crore in May, and Rs 60,847 crore in April. Cumulatively, FPIs have taken out Rs 2.23 lakh crore from Indian equities in 2026, surpassing the total withdrawals of Rs 1.66 lakh crore for all of 2025.
Factors Driving Investment
Several factors are contributing to the renewed interest from foreign investors. V K Vijayakumar, chief investment strategist at Geojit Investments, noted that the reversal of the chip trade, stability in the rupee, and improving earnings growth in India are key drivers. Corporate performance showed signs of improvement during the June quarter, which helped bolster investor confidence.
Himanshu Srivastava, principal at Morningstar Investment Research India, added that resilient economic activity and higher credit growth have reinforced confidence in India’s growth prospects. The global environment also played a role, with reduced geopolitical concerns and expectations of lower US interest rates enhancing the appeal of emerging markets like India.
Ongoing Risks
Despite the positive inflows, foreign investment remains susceptible to various risks. Tensions in the Middle East and uncertainty surrounding crude oil prices could dampen sentiment. Manish Bhandari, CEO and portfolio manager at Vallum Capital, remarked that while cash flows indicate returning conviction, futures suggest lingering caution.
Investors are closely monitoring crude oil prices and developments in US-Iran relations. Pabitro Mukherjee, Deputy Vice President of Research at Bajaj Broking, emphasized that any escalation in US-Canada trade tensions could increase market uncertainty. Additionally, US bond yields and upcoming inflation data ahead of the Federal Reserve’s mid-September policy meeting are also on investors’ radar.
In the debt market, foreign investors made selective investments, contributing Rs 627 crore through the Fully Accessible Route (FAR) and Rs 289 crore through the Voluntary Retention Route (VRR), while withdrawing Rs 2,318 crore through the general route.
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