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New Delhi: The confidence of foreign portfolio investors (FPIs) in the Indian stock market seems to be strengthening for the second consecutive month. In the first fortnight of August, foreign investors have invested ₹16,621 crore in Indian stocks. Earlier in July also, FPIs had invested about ₹20,200 crore in the Indian stock market. Two consecutive months of buying have changed the trend of heavy selling that lasted for four months.

Why is foreign investment returning in August?

According to market experts, relatively better valuations of Indian shares, strong financial results of companies, possible cut in interest rates in America, soft crude oil prices and low volatility in the rupee are the main reasons for the change in the attitude of foreign investors.

According to Manish Bhandari, CEO and Portfolio Manager, Vallam Capital, India's better valuations, strong corporate earnings, expectations of soft interest rates in the US and stability in the currency market are the key factors attracting foreign investment. Investors are also shifting some capital to India from the highly popular AI stocks of South Korea and Taiwan, he said.

Changed stance after four months of selling

At the beginning of 2026, the attitude of foreign investors towards the Indian market was very weak. FPIs had withdrawn ₹1.17 lakh crore in March, ₹60,847 crore in April, ₹32,963 crore in May and ₹49,340 crore in June. Earlier in February, he had invested ₹22,615 crore.

However, despite the purchases made in July and August, FPIs have remained net sellers in the Indian market so far this year. Their total withdrawal in 2026 has been around ₹2.4 lakh crore, which is more than the withdrawal of ₹1.66 lakh crore in the whole of 2025.

Further progress based on global indicators

Co-Founder and CEO of Track Vedant Gupte According to , FPI buying in August indicates that the earlier selloff was primarily driven by global economic conditions and not by any major concerns about India.

According to him, expectations of interest rate cuts in the US, soft crude oil prices and stability of the rupee have largely weakened the major reasons for foreign investors to stay away from India.

However, further FPI stance will depend on global economic indicators. Changes in US bond yields, dollar index, crude oil prices and companies' earnings estimates may affect foreign investment inflows in the future.

Foreign investment continues in bond market also

Foreign investors also remain interested in the Indian debt and bond market. During the period under review, FPIs have invested ₹972 crore through the full access route (FAR) and ₹69 crore through the normal route.