New Delhi: Foreign portfolio investors (FPIs) are making a comeback to Indian equities after months of sustained selling, with improving valuations, easing crude oil prices, and stronger domestic growth prospects driving renewed confidence in the market.
Foreign institutional investors (FIIs) turned net buyers in mid-June and extended their buying spree into July.
During the first half of July, they invested around $1.62 billion in Indian equities, following nearly $1.5 billion of inflows recorded in the latter half of June.
The latest buying activity has been concentrated in select sectors rather than being broad-based.
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Consumer services emerged as the biggest beneficiary, attracting approximately $767 million in foreign inflows. The metals and mining sector also witnessed a sharp turnaround, drawing around $624 million after experiencing earlier outflows. Healthcare received nearly $427 million, while financials, real estate, consumer durables, and construction materials also recorded steady foreign buying, indicating selective positioning by global investors.
The reversal comes after a prolonged phase of foreign outflows during the early months of 2026, when elevated crude oil prices and global macroeconomic uncertainty weighed on investor sentiment toward emerging markets.
Market experts say improving valuations in Indian equities, stability in oil prices, and resilient domestic economic fundamentals have made the country more attractive for global investors. At the same time, a correction in previously overheated global themes, particularly artificial intelligence-related stocks, has prompted investors to rotate capital toward markets offering stronger domestic growth visibility.
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Another factor supporting the inflows is investor positioning. Foreign ownership in Indian equities had fallen to multi-year lows following sustained selling earlier this year, leaving many global funds underweight on India.
The recent buying is therefore seen not only as a reflection of improving sentiment but also as a tactical move by overseas investors to rebuild exposure to one of the world's fastest-growing major economies, supported by relatively strong macroeconomic fundamentals and corporate earnings visibility.
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Global brokerage Goldman Sachs believes the recovery in foreign flows could continue. The firm noted that low foreign positioning in Indian equities provides room for additional inflows, describing the current trend as both a shift in investor sentiment and a structural reallocation of capital back into the Indian market.
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