Foreign investors boosted Indian stocks by Rs 16,621 crore in the first half of August, signalling a renewed confidence driven by sector shifts, improving valuations, and expectations of lower US interest rates, despite ongoing net outflows in 2026.
Foreign investors poured Rs 16,621 crore into Indian equities in the first half of August, extending a rebound that began in July as cheaper valuations, steady earnings and expectations of lower US interest rates improved the mood towards the market, according to data cited by PTI and CDSL. The latest inflow follows a Rs 20,200 crore purchase in July and marks a sharp reversal from a prolonged stretch of heavy selling earlier in the year.
The turnaround is notable because foreign portfolio investors had pulled out large sums in the preceding months, including Rs 1.17 trillion in March, Rs 60,847 crore in April, Rs 32,963 crore in May and Rs 49,340 crore in June, after having bought Rs 22,615 crore in February, the data showed. Even with the recent buying, overseas investors remain net sellers in Indian shares in 2026, with outflows already far above the total recorded in 2025.
Market participants said the change in tone reflects a mix of global and domestic factors. Manish Bhandari, chief executive and portfolio manager at Vallum Capital, told Medical Buyer that improving relative valuations, resilient corporate results, expectations of softer US rates, lower currency swings and a rotation away from crowded artificial intelligence trades in South Korea and Taiwan have helped draw money back to India. Vedant Gupte, co-founder and chief executive of Trackk, said the August inflows suggest the earlier selling was driven more by macroeconomic conditions than a loss of confidence in India itself.
Gupte also argued that the reasons for staying away from Indian stocks have begun to ease, pointing to expectations of US rate cuts, softer crude prices and a rupee that has steadied. He said foreign investors are becoming more selective, with consumer-linked businesses attracting particular interest. “Consumer durables and healthcare are attracting interest. Foreign investors are underwriting the Indian household, not the Indian invoice,” he said. July’s sector data showed buying in consumer services, healthcare, consumer durables, metals and mining, and information technology, even as other sectors saw net selling.
The latest figures also show that overseas investors are still watching India’s debt market. During the period under review, they bought Rs 972 crore worth of debt through the fully accessible route and another Rs 69 crore via the general route. Analysts said the next phase of flows will remain sensitive to US Treasury yields, the dollar, oil prices and earnings upgrades, with Bajaj Broking’s Pabitro Mukherjee highlighting crude and the ongoing US-Iran tensions as key short-term risks.
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