Foreign portfolio investors resumed their focus on Indian equities in August’s first half, driven by improved valuations and resilient domestic demand, even as overall foreign outflows for 2026 remain substantial amid global macro uncertainties.
Foreign portfolio investors continued to return to Indian equities in the first half of August, putting in ₹16,621 crore as better relative valuations, steadier earnings and the prospect of lower US interest rates lifted sentiment. The fresh buying followed a ₹20,200-crore inflow in July, extending a sharp reversal after four months of heavy selling. Yet foreign investors remain net sellers for 2026 overall, having withdrawn about ₹2.4 lakh crore so far, which already exceeds the full-year outflow seen in 2025, according to CDSL data cited by The Hindu BusinessLine.
The latest numbers point to a broader shift in global positioning. Manish Bhandari, chief executive and portfolio manager at Vallum Capital, told the newspaper that improving valuations, resilient corporate results and softer currency volatility were helping India regain appeal, alongside a move away from crowded artificial intelligence trades in Korea and Taiwan. Vedant Gupte, co-founder and chief executive of Trackk, said the recent inflows suggest the earlier exodus was driven more by global macro pressures than by any loss of confidence in India itself.
Gupte also said foreign buying is becoming more selective, with consumer-facing businesses drawing stronger interest. Consumer durables and healthcare are seeing renewed attention, he said, while July’s sector flow data showed buying in consumer services, healthcare, consumer durables, metals and mining, and information technology, even as other areas saw net selling. That pattern fits with a market where domestic demand themes are still attracting capital despite broader caution.
The outlook remains tied to external factors, particularly US Treasury yields, the dollar, crude oil and earnings upgrades. Pabitro Mukherjee, deputy vice-president of research at Bajaj Broking, said investors will watch oil prices closely in the coming week, especially against the backdrop of US-Iran tensions. Foreign investors also returned to Indian debt, putting in ₹972 crore through the Fully Accessible Route and another ₹69 crore via the general route during the period.
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