Foreign Portfolio Investors Infuse ₹30,919 Crore in Indian Equities in August

Foreign portfolio investors (FPIs) invested ₹30,919 crore into Indian equities during August, extending their buying streak to a second straight month, according to CDSL data.

This follows an investment of ₹20,200 crore in July, marking a notable turnaround after four consecutive months of heavy selling by foreign investors. Earlier in the year, FPIs withdrew ₹49,340 crore in June, ₹32,963 crore in May, ₹60,847 crore in April, and a massive ₹1.17 lakh crore in March. Prior to that heavy selling phase, they had invested ₹22,615 crore in February.

Despite the two consecutive months of inflows offering the first indication of a potential trend reversal, foreign investors remain net sellers in Indian equities for 2026 overall. Total withdrawals so far stand at ₹2.23 lakh crore, surpassing the ₹1.66 lakh crore outflow recorded across the entire year of 2025.

Market experts attribute the August inflows to a combination of domestic and global factors. V.K. Vijayakumar, Chief Investment Strategist at Geojit Investments, noted that the important factors driving these flows include the reversal of the chip trade, stability in the rupee, and improving earnings growth in India.

Himanshu Srivastava, Principal for Manager Research at Morningstar Investment Research India, pointed out that corporate earnings showed signs of improvement during the June quarter, easing earlier concerns regarding an earnings slowdown. Resilient economic activity and strengthening credit growth also reinforced institutional confidence in India's medium- to long-term growth prospects.

On the global front, easing geopolitical concerns aided risk sentiment. Expectations of softer US interest rates and a rotation of global capital away from crowded AI and semiconductor trades in markets like Korea and Taiwan created room for incremental allocations toward India.

However, external risks remain. Tensions in West Asia, uncertainty over crude oil prices, and escalating US-Canada trade tensions continue to pose an overhang. Manish Bhandari, CEO and Portfolio Manager at Vallum Capital, observed that cash flows suggest returning conviction while futures indicate lingering caution.

Looking ahead, market participants will closely monitor Brent crude price movements, upcoming US inflation data, and the U.S. Federal Reserve's policy meeting in mid-September, alongside domestic Q1 GDP growth and inflation metrics.

Foreign interest also extended selectively into the debt market during August. Investors infused ₹627 crore through the Fully Accessible Route (FAR) and ₹289 crore through the Voluntary Retention Route (VRR), while withdrawing ₹2,318 crore through the general route.

"The return of foreign portfolio investments for two consecutive months is a positive indicator for institutional confidence in the Indian market. While macroeconomic fundamentals and corporate earnings are showing resilience, global uncertainties such as crude oil prices and US monetary policy mean that cautious optimism remains the prudent approach for businesses and investors alike." — Dr. Shishir Gupta, Founder & CEO, StartupLanes