FPIs turn to buyers for the second month, investing ₹30,919 crore in August

Foreign portfolio investors (FPIs) poured ₹30,919 crore into Indian stocks in August, extending their buying streak for the second straight month, amid improving, resilient economic activity, a stable rupee and easing geopolitical concerns.

The inflow follows ₹20,200 crore invested in July, marking a sharp turnaround after four consecutive months of heavy selling.

FPIs withdrew $49,340 million in June, $32,963 million in May, $60,847 million in April and a massive $1.17 million in March. Before the selling spree, they invested ₹22,615 crore in February, according to Central Depository Services (India) Ltd data. (CDSL).

Two consecutive months of buying, following the worst six-month stretch in years, offer the first hint of a possible trend reversal.

However, foreign investors will remain net sellers of Indian stocks in 2026, with withdrawals of ₹2.23 crore so far. This is higher than the outflow of ₹ 1.66 lakh crore recorded during the whole of 2025.

“Important factors driving FPI flows into India are the turnaround in the chip business, stability in the rupee and more importantly, improving earnings growth in India,” said VK Vijayakumar, chief investment strategist at Geojit Investments.

The continuation of foreign purchases in August was supported by improving domestic fundamentals and a relatively favorable global background.

“Corporate earnings showed signs of improvement during the June quarter, helping to ease fears of a slowdown in earnings that had previously weighed on foreign investor sentiment. Resilient economic activity and strengthening credit growth also bolstered confidence in India’s medium to long-term growth prospects,” said Himanshu Srivastava, director of research at Morningstar Investment Research India.

Global factors also turned relatively supportive during part of the month.

Easing geopolitical concerns helped risk sentiment, while expectations of softer US interest rates and a rotation of global capital away from crowded AI and semiconductor trade in markets such as Korea and Taiwan created room for incremental allocations towards India, he added.

However, tensions in West Asia and uncertainty over oil prices continued to dominate.

“Cash flows indicate a return of conviction; futures indicate continued caution. The trend may be reversing, with post-AI and war-related concerns receding,” said Manish Bhandari, managing director and portfolio manager at Vallum Capital.

Going forward, investors will be closely watching Brent crude oil price movements and developments around US-Iranian tensions. An escalation in trade tensions between the US and Canada could further add to market uncertainty and keep investors cautious, said Pabitro Mukherjee, assistant vice president, research, Bajaj Broking.

Elevated US bond yields also remain a key concern, with markets awaiting upcoming inflation data ahead of the Federal Reserve’s mid-September policy meeting.

On the domestic front, Q1 GDP growth and inflation data will remain key indicators to watch for institutional flows, he added.

The interest of foreign investors also extended to the debt market. They have invested ₹627 crore through Fully Accessible Route (FAR) and ₹289 crore through Voluntary Retention Route (VRR). However, they pulled in ₹2,318 crore through the general route.

Published – 30 Aug 2026 21:41 IST