MUMBAI: Marking the first turn in the tide since the US-Iran conflict broke out this February, foreign portfolio investors (FPIs) have become net buyers of Indian equities since the latter half of June, reviving momentum in sectors like financial services, construction, consumer services, consumer durables, realty and health care, according to data from the National Securities Depository (NSDL).
In the second half of June, FPIs invested around ₹14,109 crore, after pulling out nearly ₹63,450 crore during the first half of the month. Further, FPIs have bought Indian equities worth about ₹2,985 crore so far in July.
On the back of renewed foreign buying, the Indian equity benchmarks closed at their highest levels on Monday in 10 weeks. The Sensex rose 521 points, or 0.7 per cent, to end at 78,285, while the Nifty 50 gained 160 points, or 0.7 per cent, to close at 24,430. Both indices have finished higher in each of the four trading sessions so far this month.
FPIs have now recorded net equity inflows for three consecutive weeks through July 3 – also the longest stretch of positive foreign flows in stocks since the onset of war in West Asia. So far in 2026, FPIs remain net sellers in equities with ₹2.7 trillion outflows.
On a fortnightly basis, too, FPIs turned net buyers for the first time since February 27, investing about ₹8,587 crore in the fortnight ended July 3.
At the end of June, FPI assets under custody in Indian equities stood at about ₹68.64 trillion.
The shift in flows was most evident in the financial services sector, which attracted net foreign flows of about ₹14,634 crore in the second half of June, compared with net outflows of ₹11,263 crore in the first half. Construction and consumer services followed, with net inflows of about ₹3,484 crore and ₹3,081 crore, respectively, reversing outflows of ₹603 crore and ₹1,852 crore in the preceding fortnight.
Consumer durables, realty, services and health care also recorded significant net buying during the second half of June. By contrast, metals and mining and power continued to witness heavy selling, with net outflows of about ₹4,371 crore and ₹3,743 crore, respectively.
Selling pressure also persisted in FMCG and IT stocks, although outflows moderated compared with the first half of the month.
“Foreign selling has been the primary factor constraining India’s market performance over the past two years. However, even a transition from aggressive selling to a neutral stance, or merely a moderation in outflows, could provide a significant tailwind for equities, supported by resilient domestic institutional and retail inflows,” said Motilal Oswal Financial Services in its India Strategy Report.
Indian equities have been trading with a positive bias despite mixed global cues, aided by softer crude oil prices after the reopening of the Strait of Hormuz following a peace agreement between Iran and the US.
Globally, profit-taking in crowded artificial intelligence-driven trades has weighed on markets. India, however, is better placed to outperform, led by largecap stocks as FPI inflows improve, said Vinod Nair, head of research at Geojit Investments. “On the domestic front, financials, autos, realty and oil & gas led the gains (on Monday). Financials were supported by expectations of healthy private bank earnings, while autos benefited from strong volume trends and an improving demand outlook. Realty remained buoyed by resilient housing demand,” he said.
The recovery in equity flows follows a similar trend in the domestic debt market, where FPIs invested about ₹32,647.4 crore in June and another ₹1,919.2 crore so far in July. The surge in debt inflows came after the Reserve Bank of India expanded the Fully Accessible Route (FAR) to include all new issuances of 15-year, 30-year and 40-year government securities, while also easing investment norms for overseas investors.
Source: Business Standard
