Foreign Investors Return to Indian Equities in July 2026

Foreign Portfolio Investors (FPIs) ended a four-month selling streak in July 2026, returning to Indian equities with net investments of approximately Rs 20,200 crore. This turnaround follows a period of massive withdrawals between March and June, which contributed to total calendar year outflows of Rs 2.54 lakh crore. Total net foreign portfolio investment across all asset classes reached Rs 40,031 crore in July, marking the strongest monthly inflow of the year.

Analysts attribute the shift to attractive large-cap valuations, improving corporate earnings in the IT sector, and relative market stability compared to South Korea and Taiwan. FPIs also showed significant interest in debt markets, investing Rs 29,212 crore through the general route and Rs 3,033 crore via the fully accessible route. Domestic institutional investors continued their buying trend, purchasing Rs 35,100 crore in July.

Bank of Baroda reported that the Indian rupee remained stable, depreciating by only 0.8% in July despite a 20% surge in crude oil prices caused by West Asia tensions. This stability was supported by a decline in the US Dollar Index and interventions by the Reserve Bank of India, which used special measures to attract USD 40.8 billion. Investors are now monitoring US-Iran geopolitical tensions and the Reserve Bank of India's monetary policy scheduled for August 5.