FPIs return to two successive months of buying for the first time since November

Foreign portfolio investors (FPIs) have extended their buying streak into a second consecutive month in August, marking the first such instance since November last year. Foreign investors have cumulatively bought nearly $5 billion worth of Indian shares over the past two months.

The buying comes after FPIs sold more than $27 billion worth of Indian equities between March and June. The previous instance of two consecutive months of buying was in October and November, when FPIs bought about $1.3 billion worth of shares.

However, the latest buying by overseas investors has been selective rather than broad-based, with a significant portion of the inflows coming through block deals, qualified institutional placements (QIPs) and offers for sale (OFS). The Indian market saw combined IPO, QIP and OFS issuances worth more than ₹1.2 lakh crore in July and August.

Improving earnings visibility has also helped shift foreign investors’ sentiment towards Indian equities. The combined net profit of Nifty500 companies rose 13% year-on-year to ₹4.4 lakh crore in the June quarter, while revenue increased 21% to ₹39.2 lakh crore.

“Visibility on earnings improvement is better than it has been at any time in the last two to three years,” said Sailesh Raj Bhan, CIO-Equities at Nippon India Mutual Fund.

According to Raj Bhan, valuations in consumer discretionary segments such as hotels and consumer durables have also moderated. Consumer staples are trading at around 30 times earnings, although earnings expectations for the segment remain subdued.

The Nifty50 is currently trading at about 18 times 12-month forward earnings, below its five-year average of around 20 times, according to Bloomberg data.

Meanwhile, domestic institutional investors (DIIs), including mutual funds and insurance companies, bought $5.4 billion worth of shares in August, following purchases of $3.7 billion in July. However, domestic buying has slowed somewhat, with DII purchases over the past two months nearly 50% below their preceding six-month average.

Also Read: FII equity flows into India net to zero over a decade, Motilal Oswal's Duggad says

Among emerging markets, Taiwan attracted the highest foreign inflows in August at $9.1 billion, followed by India at $2.1 billion, according to Bloomberg data. South Korea, which had attracted significant foreign inflows on the back of the AI-led rally, saw the highest outflows during the month at $8.6 billion.

FPI flows

Month	FPI flows ($ bn)
Aug-26	2.12
Jul-26	2.45
Jun-26	-3.04
May-26	-4.91
Apr-26	-5.22
Mar-26	-14.22
Feb-26	1.69
Jan-26	-3.26
Dec-25	-2.63
Nov-25	0.04
Oct-25	1.25
Sep-25	-2.13
Aug-25	-4.31

Source: Bloomberg