Summary of this article
FPIs invested Rs 20,200 crore after four months of sustained equity selling
DIIs extended 36-month buying streak, investing Rs 35,099.25 crore in July
Stable rupee, fair valuations attracted renewed foreign interest in Indian equities
Foreign portfolio investors (FPIs) turned net buyers of Indian equities in July 2026, snapping a four-month selling streak with net purchases of Rs 20,200 crore, aided by improving global risk appetite, stable domestic fundamentals, and renewed interest in mid- and small-cap stocks.
According to data from the National Securities Depository (NSDL), FPIs invested a cumulative Rs 20,199 crore in Indian equities during the month. Of this, Rs 6,731 crore came through exchange purchases, while Rs 13,467 crore was invested through the primary market.
The July inflows followed sustained selling pressure earlier this year. FPIs had offloaded Rs 35,962 crore in January, invested Rs 22,615 crore in February, and then resumed selling, withdrawing Rs 1,17,775 crore in March, Rs 60,847 crore in April, Rs 32,963 crore in May, and Rs 49,340 crore in June. Despite the turnaround in July, overseas investors have remained net sellers to the tune of Rs 2,54,072 crore so far in calendar year 2026.
Domestic institutional investors (DIIs), meanwhile, continued to provide strong support to the market. They invested Rs 35,099.25 crore in equities during July, extending their buying streak to 36 consecutive months. Cumulative DII investments in Indian equities have reached Rs 5,05,236.41 crore so far this year.
VK Vijayakumar, chief investment strategist at Geojit Investments, said the renewed FPI interest reflected a shift in global capital allocation rather than a short-term tactical move. “The excessive volatility in markets like South Korea and Taiwan and the concentration risk in the ‘chip trade’ are prompting FPIs to look for stable markets, such as India. The stability in rupee and fair valuations of India’s large-cap stocks are other factors that are facilitating the renewed inflows of FPI into India. A significant recent trend is FPIs buying into Indian mid- and small-cap stocks. The high growth potential of this segment is the principal reason for the increasing FPI allocation to these segments,” he said.
The July inflows also come against the backdrop of a broader structural shift in domestic equity ownership. In a July 2026 strategy report, Motilal Oswal Financial Services noted that DII ownership in Nifty 500 companies rose to a record 21 per cent in June 2026, marking the ninth consecutive quarter of increase, while FII ownership slipped to a record low of 17 per cent.
The brokerage said persistent domestic inflows, supported by robust systematic investment plan (SIP) contributions, have continued to offset foreign selling. Over the past 22 months since the market peak in September 2024, cumulative DII inflows have comfortably absorbed sustained FII outflows, reinforcing the growing role of domestic investors in India’s equity markets.
The report further said that on a year-on-year (y-o-y) basis, DIIs increased their holdings across 19 of the 24 sectors in Nifty 500, while FPIs reduced their exposure in 19 sectors. However, foreign investors have recently started raising allocations to sectors, such as private financials, capital goods, logistics and real estate, while their interest in technology has moderated.
