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Foreign portfolio investors bought a net ₹30,919 crore of Indian equities in August, extending their buying streak to a second month as corporate earnings and a stable currency revived the market’s appeal. The August influx follows ₹20,200 crore in July purchases, marking a sharp reversal after four consecutive months of heavy offloading. Overseas funds had dumped Indian shares between March and June, including a massive ₹1.17 lakh crore withdrawal in March alone, according to CDSL data. The consecutive months of buying offer the first indication of a trend reversal following one of the worst six-month stretches for foreign flows in years. “The important factors driving the FPI flows into India are the reversal of the chip trade, the stability in the rupee and, more importantly, the improving earnings growth in India,” said V K Vijayakumar, chief investment strategist at Geojit Investments. Global capital has recently rotated away from crowded artificial intelligence and semiconductor trades in markets like Taiwan and South Korea, creating room for incremental allocations toward India. That shift has been aided by expectations of a Federal Reserve rate cut and resilient domestic fundamentals. Corporate earnings in the June quarter showed signs of improvement, helping to ease concerns over a broader slowdown that had previously weighed on sentiment, according to Himanshu Srivastava, principal manager of research at Morningstar Investment Research India. Despite the recent optimism, foreign investors remain net sellers for the year. Total withdrawals for 2026 stand at ₹2.23 lakh crore, outpacing the ₹1.66 lakh crore in outflows recorded for all of 2025. Market watchers remain cautious amid Middle East tensions, crude oil volatility, and elevated US bond yields ahead of the Fed’s September policy meeting. Potential US-Canada trade frictions could also inject fresh volatility into the market. “Cash flows suggest returning conviction; futures suggest lingering caution,” said Manish Bhandari, CEO and portfolio manager at Vallum Capital. “The trend may be turning, post AI and war-related worries receding.” Domestically, upcoming Q1 GDP growth and inflation prints will serve as the next major catalysts for institutional flows. In the debt market, foreign investors remained largely defensive. They pulled ₹2,318 crore through the general route, offsetting minor inflows of ₹627 crore via the Fully Accessible Route (FAR) and ₹289 crore through the Voluntary Retention Route (VRR). Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates. Oops! Looks like you have exceeded the limit to bookmark the image. Remove some to bookmark this image.
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