After four months of selling, foreign investors in July renewed their interest in Indian stocks, favouring sectors linked to domestic demand such as consumer durables, healthcare, and Information Technology, driven by improving economic outlook and valuations.
Foreign portfolio investors stepped up buying in Indian consumer durables, healthcare and information technology shares in the second half of July, a sign that overseas money is beginning to favour sectors tied to domestic demand and more reasonable valuations after a bruising spell of selling. Market participants said the shift reflected improving expectations for household spending, a theme that has strengthened as fast-moving consumer goods demand has started to recover and investors look for that momentum to spill into discretionary purchases such as appliances and other durable goods.
Healthcare has also remained a steady magnet for foreign inflows, with hospitals drawing particular attention. Chokkalingam G, founder of Equinomics, said the segment continues to look attractive because India still has relatively low hospital-bed penetration compared with similar economies, while listed operators are posting solid year-on-year growth. That combination of structural demand and reported earnings strength has helped keep the sector on international investors’ radar.
Technology stocks have benefited from a different argument: valuation. After a lengthy correction, some foreign investors see Indian IT shares as cheaper than they were earlier in the year, while also seeking to reduce exposure to artificial intelligence names that have surged sharply and, in some cases, may have run ahead of fundamentals. The result has been a rotation into a market that still offers scale, global exposure and, in some cases, more modest pricing.
The renewed appetite for select sectors came as foreign portfolio investors turned net buyers of Indian equities in July, ending four straight months of selling. According to data from the Central Depository Services (India) Ltd, they bought more than ₹15,157 crore of Indian shares in the month, helped by better domestic macro indicators, a stable rupee and improved global risk sentiment. The first two weeks of July were already pointing in that direction, and by the second half of the month they had added ₹4,642 crore more. Even so, they were still selling heavily in capital goods, telecommunications and financial services, with profit-taking and rich valuations weighing on those areas.
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