Foreign Investors Return to India with Record July Inflows

Foreign portfolio investors (FPIs) returned as net buyers in Indian markets in July 2026, ending a four-month selling streak that peaked with massive withdrawals in March. Total net foreign portfolio investment across all asset classes reached approximately Rs 40,031 crore, the strongest monthly inflow of the year. Equities saw a significant rebound with net inflows estimated between Rs 15,157 crore and Rs 20,200 crore, while debt investments through the general route reached Rs 29,212 crore.

Government of India and Reserve Bank of India measures drove this recovery, including tax exemptions on sovereign bonds, a revised FCNR-B deposit scheme, and a concessional dollar-swap window for PSU loans. These initiatives, combined with stable rupee values and attractive large-cap valuations, redirected capital toward India as volatility increased in South Korean and Taiwanese markets.

Despite the July surge, overseas investors remained net sellers for the calendar year, with cumulative withdrawals totaling approximately Rs 2.54 lakh crore through July. The Indian rupee remained relatively stable, depreciating by only 0.8% in July despite a 20% spike in crude oil prices. This stability was supported by RBI interventions and a decline in the US Dollar Index. Investors continue to monitor the impact of US-Iran geopolitical tensions and the Reserve Bank of India's upcoming monetary policy updates.