FPIs turn buyers for second month, invest ₹30,919 crore in August

Foreign Portfolio Investors (FPIs) continued their buying spree in Indian equities for the second consecutive month in August, injecting ₹30,919 crore, according to data from the Central Depository Services (India) Ltd. (CDSL). This follows a ₹20,200 crore inflow in July, reversing the heavy selling trend observed from March to June. The shift in FPI sentiment comes amid improving domestic economic activity, a stable rupee, and easing geopolitical concerns.

The cumulative outflow of ₹2.23 lakh crore from Indian equities in 2026 remains higher than the full-year ₹1.66 lakh crore recorded in 2025, despite the recent buying trend. The worst six-month stretch for FPIs saw withdrawals of ₹49,340 crore in June, ₹32,963 crore in May, ₹60,847 crore in April, and a massive ₹1.17 lakh crore in March. Before this, FPIs had invested ₹22,615 crore in February, highlighting the volatility in recent months.

Experts attribute the renewed FPI interest to several factors. V.K. Vijayakumar, Chief Investment Strategist at Geojit Investments, pointed to the reversal of the chip trade, rupee stability, and improving earnings growth in India as key drivers. Himanshu Srivastava, Principal at Morningstar Investment Research India, noted that corporate earnings showed signs of improvement during the June quarter, easing concerns about an earnings slowdown. Resilient economic activity and strengthening credit growth further bolstered confidence in India’s medium- to long-term growth prospects.

Global factors also contributed to the positive sentiment. Easing geopolitical tensions, expectations of softer U.S. interest rates, and a shift in global capital away from crowded markets like Korea and Taiwan created room for incremental allocations toward India. However, risks such as tensions in West Asia and uncertainty over crude oil prices continued to weigh on investor sentiment.

Manish Bhandari, CEO and Portfolio Manager at Vallum Capital, observed that cash flows suggested returning conviction among FPIs, though futures markets indicated lingering caution. He noted that post-AI and war-related worries appeared to be receding, potentially signaling a turning point.

Looking ahead, investors will closely monitor Brent crude prices, U.S.-Iran tensions, and U.S.-Canada trade developments, which could introduce further uncertainty. Elevated U.S. bond yields and upcoming inflation data before the Federal Reserve’s mid-September policy meeting also remain key concerns.

On the domestic front, Q1 GDP growth and inflation data will be critical indicators for institutional flows. Additionally, FPIs showed interest in India’s debt market, investing ₹627 crore through the Fully Accessible Route (FAR) and ₹289 crore through the Voluntary Retention Route (VRR), though they withdrew ₹2,318 crore through the general route.

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