FPI inflows into Indian equity markets reached Rs 27,186 crore ($2.849 billion) in August 2026, according to the latest data from National Securities Depository Services Ltd (NSDL), marking the second consecutive month of FPI inflows.

Key Highlights

• FPI inflows reached Rs 27,186 crore in August, marking the highest monthly investment since September 2024.
• Foreign portfolio investors (FPIs) continued their buying spree in the month of July with an investment of Rs 20,200 crore.

The FPI net inflow in August is the highest since September 2024, when FPIs had pumped in Rs 57,724 crore ($6.890 billion) into Indian equities. For the second consecutive month, FPIs were net buyers with an investment of Rs 20,200 crore ($2.123 billion) in July.

A total of Rs 15,491 crore was bought via the exchanges and Rs 11,694 crore was bought through the "primary market and others" category, overall, of the total FPI buying till August 25, 2026.

India Benefits from Rotation Out of Global 'Chip Trade'

Jitendra Gohil, CIO – Listed Equities at Bajaj Alts, said Indian equities have been a beneficiary of the rotation out of the global "chip trade" in markets such as Korea and Taiwan, with India seen as a safer bet for FPIs within emerging markets. He said other markets were getting overheated as investors piled into AI-related stocks, adding that a large part of the negativity appears to be over, and FPIs may gradually turn to India if macroeconomic conditions remain stable and earnings revive.

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FPIs Turning Selective on Mid-Caps

According to V K Vijayakumar, Chief Investment Strategist at Geojit Investments, FPIs are not buying large banking or IT stocks currently, but are selectively purchasing mid-caps despite elevated valuations.

Supported by improved liquidity, the broader markets gained ground in August, with the mid-cap and small-cap indices rising 1.83% and 3.7%, respectively, during the month (till August 27). However, the Sensex and Nifty have each fallen around 1% during the same period.

Vijayakumar said that given India's improving GDP growth and earnings growth outlook, FPIs are likely to sustain the current buying trend. He flagged high US bond yields as a key headwind, noting that elevated yields remain negative for equities globally.

FPIs Remain Net Sellers for CY26 Despite Recent Inflows

The latest FPI inflows mark a shift from the heavy FPI outflows witnessed earlier in the year, although foreign investors remain net sellers in Indian equities for CY26. In the entirety of CY25, FPIs had been net sellers of Rs 1.66 trillion ($1.89 billion).

With the pace of earnings growth strengthening and the breadth of growth improving, Motilal Oswal Financial Services expects the overall risk-reward profile to turn more favourable, enhancing India's attractiveness from an FII perspective going forward.

A Word of Caution on Near-Term Volatility

According to G Chokkalingam, Founder and Head of Research at Equinomics Research, the domestic market is likely to remain volatile with a downward bias in the near term, due to elevated oil prices and a lack of adequate liquidity in the secondary markets.

Chokkalingam said the small and mid-cap (SMC) segment is likely to perform better selectively compared to the frontline Sensex and Nifty indices, advising investors to stay away from stocks with excessive valuations. He noted that the dominance of mutual funds and the entry of new retail investors will create selective opportunities within the SMC segment, though most richly valued stocks across the market are likely to see corrections.

He added that the liquidity needed to support new investment themes and newly listed stocks is likely to come largely from investors selling stocks they already hold, rather than through substantial fresh inflows of new money into the market.