Foreign investors inject Rs 27,000 crore in August despite year-long selling spree

Foreign portfolio investors (FPIs) brought in more than Rs 27,000 crore into Indian equities during August, providing a significant boost to market sentiment and marking the highest monthly inflow in nearly a year. The substantial inflow represents a reversal from the consistent selling pressure that has dominated FPI flows for most of 2026, offering a glimmer of hope for market participants who have watched overseas investors steadily reduce their India exposure.

Despite the August uptick, FPIs remain net sellers in Indian equities when viewed on a full-year basis. According to available data, foreign investors have pulled out a net Rs 2.27 trillion ($24.31 billion) from Indian markets during 2026, reflecting broader concerns about valuations and relative returns in other emerging markets.

The August inflow comes after FPIs have posted net purchases for two consecutive months, suggesting a potential shift in sentiment towards Indian equities. Market analysts attribute the recent buying interest to a combination of factors, including attractive valuations at current levels and expectations of improved corporate earnings in the coming quarters.

The persistence of net outflows despite recent months of buying underscores the volatility in FPI flows and the sensitivity of foreign investors to global macroeconomic conditions and relative asset valuations across emerging markets. Market participants will be closely monitoring FPI flows in the coming months to assess whether the August buying represents a sustained reversal of the year-long selling trend.