In the first week of August, foreign portfolio investors turned net buyers in India, driven by easing geopolitical tensions, strong corporate earnings, and a shift away from global AI trades, signalling renewed optimism in the Indian market.
Foreign portfolio investors turned into strong net buyers of Indian markets in the first week of August, adding ₹12,290.68 crore across equities, debt, hybrid instruments and mutual fund routes between August 3 and August 7, according to data from the National Securities Depository Ltd.
Equities accounted for most of the buying, drawing net inflows of ₹12,921.14 crore over the five sessions. The sharpest surge came on August 5, when foreign investors bought shares worth ₹9,323.38 crore on a net basis, far outpacing the smaller inflows seen on August 3 and August 4. Buying then slowed towards the end of the week, though equities still finished in positive territory on both August 6 and August 7.
Debt flows were mixed. FPIs bought ₹621.69 crore through the debt-general limit route, but those gains were partly offset by outflows of ₹354.20 crore from debt-voluntary retention route securities and ₹377 crore from debt-far instruments. Hybrid products saw net outflows of ₹570.74 crore, while mutual fund routes brought in a modest ₹49.79 crore. Alternative investment funds saw no activity during the week.
Market participants said the buying reflected firmer risk appetite after a recent easing in geopolitical tensions, as well as support from stronger-than-expected corporate results and robust auto sales. Geojit Investments’ chief investment strategist V K Vijayakumar said the shift in FPI behaviour that was visible in July had continued into August, with foreign investors also remaining active in the debt-general limit segment. He added that interest in automobiles, consumer durables and healthcare appeared linked to improving earnings momentum in those areas.
Other analysts pointed to a broader improvement in sentiment. Bajaj Broking’s deputy vice-president of research, Pabitro Mukherjee, said foreign and domestic institutional investors were both helped by de-escalation in geopolitical tensions. Master Capital Services’ chief research officer, Ravi Singh, said easing US-Iran tensions, better-than-expected first-quarter earnings, strong auto sales and the Reserve Bank of India’s steady policy stance all supported the week’s tone. Trustline Holdings founder and chief executive N ArunaGiri said global investors may be rotating away from crowded artificial intelligence trades towards under-owned markets such as India, although he warned that West Asia remains a key risk.
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