FPIs turn buyers again, pump Rs 16,621 crore into Indian equities in August

FPIs turn buyers again, pump Rs 16,621 crore into Indian equities in August

Foreign portfolio investors (FPIs) turned buyers of Indian equities once again in August, pouring in Rs 16,621 crore during the first fortnight of the month. The buying comes amid improving relative valuations, resilient corporate earnings and growing expectations of lower interest rates in the US.The latest investment adds to the Rs 20,200 crore that foreign investors poured into Indian equities in July. The two months of buying mark a reversal from the heavy selling seen earlier in the year.FPIs had been on a four-month selling streak before July, pulling out Rs 49,340 crore in June, Rs 32,963 crore in May, Rs 60,847 crore in April and Rs 1.17 lakh crore in March. They had invested Rs 22,615 crore in February before the selling began, CDSL data showed.Even with the recent turnaround, foreign investors remain net sellers for 2026. Their withdrawals from Indian equities have reached around Rs 2.4 lakh crore so far this year, already higher than the Rs 1.66 lakh crore they pulled out over the entire 2025.Experts said the change in sentiment reflects a mix of factors that have made Indian equities more attractive to foreign investors. These include valuations compared with other markets, steady corporate earnings, expectations of US rate cuts, softer crude prices and reduced currency volatility.“The key drivers are improving relative valuations, resilient corporate earnings, expectations of softer US rates, lower currency volatility and some diversification away from crowded Korea-Taiwan AI trades. AI became a magnet of all capital across the world,” Manish Bhandari, CEO and portfolio manager, Vallum Capital told PTI.The earlier FPI selling was more closely linked to global macroeconomic factors than concerns specific to India, said Vedant Gupte, Co-Founder and CEO of investment platform Trackk.“Expectations of US rate cuts, softer crude and a rupee that has stopped misbehaving have removed the three reasons foreign investors had to stay away,” Gupte said.The buying pattern has also become more selective, with foreign investors increasingly looking towards sectors connected with domestic consumption, according to Gupte.“Consumer durables and healthcare are attracting interest. Foreign investors are underwriting the Indian household, not the Indian invoice,” he said.July’s sectoral data reflected this preference, with Consumer Services, Healthcare, Consumer Durables, Metals & Mining and IT recording strong FPI buying. Several other sectors, however, continued to see net selling.The recent buying trend could remain vulnerable to shifts in global market conditions. Foreign investor flows are expected to remain sensitive to US treasury yields, the dollar index, crude oil prices and changes in corporate earnings expectations.Crude oil prices and developments related to the ongoing US-Iran geopolitical tensions will be among the key factors investors track in the coming week, said Pabitro Mukherjee, deputy vice president-research at Bajaj Broking.Foreign investors have also continued to put money into debt. During the period under review, FPIs invested Rs 972 crore through the Fully Accessible Route (FAR), while another Rs 69 crore flowed through the general route.