Foreign Portfolio Investors (FPIs) have continued their return to Indian equities, with investments reaching Rs 23,544 crore in August so far. A recovery in quarterly earnings, a stable rupee and improving market prospects have helped lift sentiment towards Indian stocks.The August buying comes on the back of Rs 20,200 crore of FPI investment in July. The two months of inflows have followed a prolonged period of selling, with foreign investors pulling out money from Indian equities for four consecutive months before July.The selling had been particularly heavy in the first half of the year. FPIs withdrew Rs 49,340 crore in June, Rs 32,963 crore in May and Rs 60,847 crore in April. The outflow in March stood at Rs 1.17 lakh crore. Before this stretch of selling, FPIs had invested Rs 22,615 crore in February, according to CDSL data.However, the recent return of foreign investors has not yet reversed their overall position for the year. FPIs have withdrawn around Rs 2.3 lakh crore from Indian equities in 2026 so far, already exceeding the Rs 1.66 lakh crore outflow recorded during the whole of 2025.V K Vijayakumar, chief investment strategist, Geojit Investments, attributed the renewed interest to several factors.“The factors that are driving the FPIs back to the Indian market are: earnings growth revival as reflected in Q1 results, FPI withdrawal from the ‘chip trade’, rupee stability and the impressive growth prospects of companies in the broader market,” he said.The buying has not been spread evenly across sectors and market segments. Vijayakumar said FPIs were avoiding leading large banking and IT stocks despite their attractive valuations, while selectively buying mid-cap stocks even as valuations remained elevated.The direction of the market in the coming week could also depend on movements in crude oil prices and developments in the ongoing US-Iran geopolitical tensions, Pabitro Mukherjee, deputy vice president-research, Bajaj Broking, said.Foreign investors have also made changes to their debt market exposure. They invested Rs 852 crore in debt through the Fully Accessible Route (FAR) during the period under review, while withdrawing Rs 995 crore through the general route.
