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Foreign investors’ confidence in the Indian stock market appears to be increasing once again. After months of continuous selling, foreign portfolio investors (FPIs) have resumed buying in the Indian stock market. In the first week of August alone, foreign investors invested approximately ₹12,921 crore in Indian stocks. Previously, in July, FPIs had invested approximately ₹20,200 crore in the Indian equity market. This shift in foreign investor sentiment is being seen as a positive sign for the Indian market.

In fact, before July, foreign investors had been withdrawing money from the Indian stock market for four consecutive months. According to data, in June, FPIs sold shares worth approximately ₹49,340 crore, while in May they sold shares worth ₹32,963 crore and in April, they sold shares worth approximately ₹60,847 crore. March saw the highest outflows, with approximately ₹1.17 lakh crore withdrawn from the Indian market. In February, however, FPIs invested approximately ₹22,615 crore. Following the continuous selling spree, the shift in foreign investor sentiment has been driven by several factors. According to market experts, the expectation of interest rate cuts in the US has increased investors’ interest in emerging markets. If the US Federal Reserve cuts interest rates, investing in emerging markets like India could become more attractive to investors globally. This expectation is reflected in FPI buying in the Indian market.

Furthermore, the softening of crude oil prices is also being considered positive for India. India meets a large portion of its crude oil needs through imports. Therefore, lower oil prices could reduce pressure on the country’s import bill and inflation. This is expected to benefit the Indian economy and corporate profits. The relatively stable rupee is also important for foreign investors. For a foreign investor, currency performance is as important as stock market returns. Excessive rupee volatility can increase the risk exposure of foreign investors. Therefore, the stability of the rupee has also played a role in strengthening confidence in the Indian market.

The improving health of the Indian economy and positive projections regarding economic growth are also attracting investors. Improved economic growth and inflation projections from the Reserve Bank have also boosted market sentiment. However, FPIs have withdrawn approximately ₹2.41 lakh crore from the Indian market so far in 2026. Therefore, August’s buying cannot be considered a complete confirmation of a reversal of the trend. Sectorally, foreign investors are showing interest in sectors such as automobiles, consumer durables, and healthcare. FPIs are investing not only in equities but also in the debt and bond markets. So far in August, they have invested approximately ₹622 crore in the bond market under the general route. If foreign investor buying continues, this could provide support to the Indian stock market.