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Business Desk – Foreign Portfolio Investors: After nearly four months of continuous selling, foreign investors (FPIs) have once again turned to the Indian stock market. In July 2026, foreign portfolio investors (FPIs) made a net investment of approximately ₹20,200 crore in the Indian stock market. This has halted the four-month-long selling spree and boosted investor confidence in the market.

Market experts believe that attractive valuations of Indian stocks, better corporate earnings of companies, strong results of the IT sector and reduced pressure at the global level have led to the return of foreign investors to the Indian market.

The trend changed after four months of continuous selling.

According to data from Central Depository Services Limited (CDSL), the buying by foreign investors in July is considered a major turning point for the market. Previously, foreign investors had withdrawn large sums from the Indian stock market for four consecutive months.

Foreign investors sold about ₹1.17 lakh crore in March, ₹60,847 crore in April, ₹32,963 crore in May and ₹49,340 crore in June.

Withdrawal of Rs 2.54 lakh crore still in 2026

Although the buying in July has certainly provided some relief to the market, the full year data still shows a picture of heavy selling by foreign investors.

So far in 2026, foreign investors have withdrawn a total of ₹2.54 trillion from the Indian equity market. This amount exceeds the total withdrawal of ₹1.66 trillion for the entire year 2025. This means that despite the July purchases, total foreign investor investment remains negative.

Why are foreign investors returning to India?

Market experts say that India’s strong economic position, attractive valuations in large cap stocks and better quarterly results of companies have once again increased the confidence of foreign investors.

Furthermore, India remains relatively stable compared to many other global markets. This is why foreign funds are once again increasing their investment in the Indian market.

South Korea and Taiwan’s uncertainty benefited

According to V.K. Vijayakumar, Chief Investment Strategist at Geojit Investments, increased uncertainty in markets like South Korea and Taiwan and higher risks in the semiconductor chip trade have led foreign investors to turn to stable markets like India.

He said that the strength of the Indian rupee and reasonable valuations in large-cap stocks are also major reasons for the return of foreign investors.

Good results in the IT sector boosted confidence

According to Vedant Gupte, co-founder and CEO of investment platform Trak, the June quarter (Q1FY27) results have shown signs of improvement in many sectors.

Better-than-expected results, particularly in the IT sector, have boosted investor confidence. These strong quarterly results have also alleviated many concerns about the IT industry’s growth due to artificial intelligence (AI).

He said that the easing pressure on the US dollar and the expectation of interest rates in the US reaching near peak interest rates are also positive signs for emerging markets like India.

Foreign investment also increased in the debt market

Foreign investors have made strong investments not only in the stock market but also in the Indian debt market. In July, foreign investors invested ₹29,212 crore in Indian debt securities through the General Route. An additional ₹3,033 crore was invested through the Fully Accessible Route (FAR). Thus, a total of ₹32,245 crore was recorded in the debt market in July.

What will the market keep an eye on next?

Market experts say that whether this buying by foreign investors continues will depend on several domestic and global factors. According to Pavitra Mukherjee, Deputy Vice President (Research) at Bajaj Broking, investors will be closely monitoring crude oil prices, the ongoing geopolitical tensions between the US and Iran, and the global economic environment.

The market will also be closely monitoring domestic corporate Q1FY27 results and the Reserve Bank of India (RBI) monetary policy decision on August 5. These decisions could play a key role in determining the stance of foreign investors and the direction of the stock market in the coming days.

What is FPI?

Foreign Portfolio Investment (FPI) is an investment in which foreign investors, institutions, or foreign funds invest in shares, bonds, debentures, or other financial instruments of another country. These investors’ objective is not to operate the company, but to earn returns from the investment.

What is the debt market?

The debt market is a financial market where governments and corporations issue bonds, debentures, and other fixed-income securities. Investors invest in these securities and earn returns based on a fixed interest rate. Generally, the debt market is considered a less risky investment option than the stock market.