Foreign Portfolio Investors (FPIs) turned net buyers of Indian equities in July, investing ₹17,227 crore and ending a four-month selling streak. Buying was concentrated in sectors such as healthcare, consumer services, financials, and metals, while autos and capital goods continued to see outflows. Although the reversal signals improving sentiment, future FPI flows will depend on crude oil prices and global geopolitical developments.
In July, the FPIs made a comeback into the Indian equity market, thus ending their streak of selling Indian equities in four consecutive months. According to the NSDL data (up to July 22, 2026), a net investment worth ₹17,227 crore was made by the FPIs in the Indian equities during July. Though there has been an improvement in their attitude towards India, they continue to be net sellers of equities in the calendar year 2026.
The total equity outflow from India till now is ₹2.57 lakh crore.
July Marks Sharp Reversal in FPI Flows
These recent inflows follow FPIs withdrawing an amount of ₹49,340 crore in June, ₹32,963 crore in May, ₹60,847 crore in April, and an astounding amount of ₹1.18 lakh crore in March.
At the beginning of the year, the foreign investors had put in ₹22,615 crore in February after withdrawing ₹35,962 crore in January. The buying trend that was witnessed in July has once again made people hope for a revival of foreign investments in the Indian market.
Why FPIs Returned to India
The increase in FPI inflows is due to the changes in the global investment strategy where there has been less investment in the Asian countries that have been fuelled by the semiconductor industry and more investment has been done in India.
But, whether the flow will be sustained or not depends on the prices of the crude oil. Due to the increasing tensions in the West Asian region, the prices of the crude oil have risen sharply. This may affect the growth rate of the future FPI inflows.
Healthcare and Metals Attract Strong Foreign Buying
The sector-wise analysis of flows indicates that FPI sentiment towards certain sectors has undergone a visible change in the month of July.
The healthcare sector saw equity outflows worth ₹4,101 crore, whereas the previous months had seen selling of shares in this sector.
Metal and Mining stocks saw equity outflows worth ₹5,993 crore, which was a reversal from the equity inflow of ₹2,396 crore in the previous two months.
The consumer services segment was another major gainer, as it saw an equity inflow of ₹7,361 crore.
Financial services also registered an inflow of ₹2,462 crore despite registering outflows of ₹15,754 crore for the past two months. Consumer durables witnessed an inflow of ₹2,384 crore, services received ₹2,353 crore, realty received ₹2,192 crore, construction materials witnessed an inflow of ₹1,574 crore, while construction witnessed inflows of ₹366 crore. Oil, gas and consumable fuels witnessed an inflow of ₹228 crore, and information technology witnessed an inflow of ₹60 crore.
Apart from equities, sovereign bonds emerged as the largest beneficiary registering an inflow of ₹10,668 crore in the first half of July. Post-tax returns after the elimination of long-term capital gains tax and withholding tax on eligible foreign investments in government bonds, along with reduced 10-year bond yields, spurred demand.
Why Auto and Capital Goods Continued to Witness Selling
However, not all sectors were involved in the rebound. The automobile/auto component sector continued to be the worst hit sector and posted FPI outflows amounting to ₹6,936 crore in the first half of July, after posting FPI outflows of ₹12,945 crore in the previous two months, due to weak relative strength and lack of buying interest in the sector.
Capital goods witnessed foreign selling amounting to ₹2,657 crore, after FPI outflows of ₹1,230 crore in the previous two months. The capital goods sector continued to trade below key technical levels.
Telecommunications (-₹2,452 crore), power (-₹1,304 crore), fast moving consumer goods (-₹1,106 crore), media, entertainment & publications (-₹289 crore) and chemicals (-₹114 crore) were among the other sectors where FPI outflows took place.
Outlook
The comeback of FPIs in July is the first positive development regarding foreign investment for four months of massive outflows. Investment into healthcare, metal, consumer services, and finance demonstrates an increasing confidence in particular sectors, but ongoing sales in autos and capital goods imply that foreign investors continue to be cautious. In the future, the trends of crude oil prices, geopolitical developments, and risk aversion will determine the sustainability of this development.
