Foreign Portfolio Investors (FPIs) returned to the Indian stock market in July, snapping a four-month selling streak. According to NSDL data (up to 22 July 2026), FPIs have invested a net ₹17,227 crore in Indian equities during the month.
This marks a sharp reversal after sustained outflows of ₹49,340 crore in June, ₹32,963 crore in May, ₹60,847 crore in April, and a massive ₹1.18 lakh crore in March.
Earlier in the year, FPIs had turned net buyers in February, investing ₹22,615 crore, after withdrawing ₹35,962 crore in January. Despite the recovery in July, FPIs remain net sellers for the calendar year, with cumulative equity outflows of ₹2.57 lakh crore so far in 2026, reflecting the impact of global uncertainty and risk-off sentiment.
Even a modest improvement in the numbers is enough to revive investor optimism, raising hopes that foreign inflows could be making a comeback and signalling the start of a trend reversal.
Dr V K Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said the recent improvement in FPI flows into India reflects a shift in global investor positioning, as foreign investors have turned cautious on semiconductor-heavy markets such as South Korea and Taiwan and have become net sellers there. He believes this change in allocation is supportive of Indian equities.
However, Vijayakumar cautioned that the sharp rise in crude oil prices, triggered by the escalating conflict in West Asia, has once again emerged as a key macroeconomic risk for India. Elevated oil prices could temper the pace of FPI inflows in the near term by raising concerns over inflation, the current account deficit, and corporate profitability. He added that if crude oil prices ease, foreign investors are likely to resume buying Indian equities more aggressively, potentially strengthening the ongoing recovery in FPI flows.
FPI flows highlight a shift towards bonds, healthcare and consumer plays
Sudeep Shah, Head of Technical and Derivatives Research at SBI Securities, said FPI flows in July indicate a clear rotation across sectors and asset classes. He noted that sovereign bonds attracted strong foreign inflows of ₹10,668 crore in the first half of July, extending robust buying seen in June. According to Shah, the government’s decision to remove long-term capital gains tax and withholding tax on eligible foreign investments in government bonds has improved post-tax returns, while falling 10-year bond yields reflect sustained demand.
Shah added that consumer services also witnessed healthy inflows of ₹7,361 crore, as investors continued to favour India’s domestic consumption story, supported by rising incomes, urbanisation and resilient discretionary spending.
On the equity front, he said healthcare and metals have emerged as key beneficiaries of changing FPI preferences. Healthcare attracted ₹4,101 crore, marking a turnaround after prolonged outflows, while the Nifty Healthcare Index continues to outperform and remains in a strong technical uptrend. Metals received ₹5,993 crore after June’s selling, supported by improving relative strength and a softer US dollar.
In contrast, auto and capital goods continued to witness FPI outflows. Shah said the Nifty Auto Index remains range-bound with weakening relative strength, while the Capital Goods Index has slipped below key moving averages and continues to lack directional momentum. He believes a decisive breakout in both sectors will determine their next major trend.
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