Foreign portfolio investors (FPIs) made their comeback to Indian equities in July after staying away for four consecutive months, emerging as net buyers with investments worth Rs 20,200 crore. Attractive valuations, improving corporate earnings and a better global investment environment helped bring foreign investors back.According to data from the Central Depository Services (India) Ltd (CDSL), FPIs had pulled out Rs 1.17 lakh crore from Indian equities in March, followed by outflows of Rs 60,847 crore in April, Rs 32,963 crore in May and Rs 49,340 crore in June. Before this, they had invested Rs 22,615 crore in February.Even with the July inflows, foreign investors remain net sellers for the year. They have withdrawn a total of Rs 2.54 lakh crore from Indian equities so far in 2026, much higher than the net outflow of Rs 1.66 lakh crore recorded during the whole of 2025.What brought FPIs back?Market experts said that a combination of domestic resilience and improving global conditions helped revive foreign investor interest.V K Vijayakumar, chief investment strategist at Geojit Investments, told PTI that excessive volatility in markets such as South Korea and Taiwan, along with concentration risk in the “chip trade”, is encouraging FPIs to shift towards relatively stable markets such as India.He also pointed to the stability of the rupee and fair valuations of India’s large-cap stocks as factors that are supporting fresh foreign inflows.Vedant Gupte, co-founder and CEO of investment platform Trackk, said the improving earnings outlook added to investor confidence, with June quarter results indicating a recovery across key sectors.He said IT stocks saw a sharp re-rating after companies reported better-than-expected earnings, easing concerns over the impact of artificial intelligence on the sector’s growth prospects.Gupte also said easing pressure from the US dollar and expectations that US interest rates are close to peaking have made emerging markets more attractive for investors.Debt market also sees strong foreign interestThe renewed appetite for Indian assets extended beyond equities.During July, FPIs invested Rs 29,212 crore in the debt market through the general route. They also invested another Rs 3,033 crore through the fully accessible route, indicating continued interest in Indian debt instruments alongside equities.The direction of foreign investment in the coming weeks is expected to depend on both overseas developments and domestic events.Pabitro Mukherjee, deputy vice president-research at Bajaj Broking, said investors will closely monitor crude oil prices and developments in the ongoing US-Iran geopolitical tensions.Domestically, attention will remain on the Q1FY27 earnings season and the Reserve Bank of India’s monetary policy decision scheduled for August 5, he added.