Foreign Portfolio Investors (FPIs) have continued their return to Indian equities, investing ₹23,544 crore in August so far, according to the latest data cited by ET Now. The inflow extends the buying trend that began in July, when foreign investors turned net buyers after four consecutive months of heavy selling.
The renewed foreign buying comes as investors continue to assess India’s domestic growth prospects. However, market experts are warning that elevated crude oil prices and ongoing US-Iran geopolitical tensions could create fresh volatility for Indian equities in the coming sessions.
Foreign investors reverse months of selling
The August inflow follows ₹20,200 crore of net FPI investment in July, marking a significant turnaround from the first half of 2026. Before July, FPIs had withdrawn ₹49,340 crore in June, ₹32,963 crore in May, ₹60,847 crore in April and a massive ₹1.17 lakh crore in March, according to NSDL data cited by ET Now.
The buying trend has therefore provided some relief to Indian markets after a prolonged period of foreign selling. February was another positive month, with FPIs investing ₹22,615 crore, although January recorded outflows of ₹35,962 crore.
Despite the recent improvement, foreign investors remain significant net sellers for the year as a whole. Their cumulative equity outflows for calendar 2026 stand at around ₹2.30 lakh crore, already exceeding the ₹1.66 lakh crore withdrawn during the entire calendar year 2025.
Domestic investors continue to support the market
Domestic institutional investors (DIIs) have also played an important role in supporting Indian equities. According to Bajaj Broking’s Pabitro Mukherjee, DIIs were net buyers during every trading session of the week under review, deploying ₹17,320 crore.
Between July 20 and August 21, DIIs remained net buyers every week, accumulating purchases of approximately ₹48,390 crore. During August so far, DIIs added around ₹34,370 crore, while FPIs added roughly ₹2,510 crore over the period referenced by the brokerage analysis.
The combination of domestic institutional buying and renewed foreign participation has helped provide support to the market despite continued global uncertainties.
Crude oil and US-Iran tensions remain key risks
While foreign buying has improved investor sentiment, elevated crude oil prices remain a major concern. Bajaj Broking said benchmark indices traded with a corrective bias for the second consecutive week, with crude oil prices remaining above $92 a barrel and tensions between the US and Iran continuing to weigh on sentiment.
Higher crude prices are particularly important for India because the country relies heavily on imported oil. A prolonged increase in crude prices can raise input and transportation costs, put pressure on inflation and potentially affect India’s trade balance.
Geopolitical developments involving the US and Iran could further influence energy prices and global risk sentiment. Investors are therefore likely to closely monitor developments in the region alongside movements in crude oil.
Nifty remains under pressure despite late-week recovery
Indian benchmark indices remained volatile during the week. The Nifty began the week on a weak note and fell to an intra-week low of 24,026 on Wednesday before recovering during the final two sessions.
The index eventually closed around 24,252, recording a weekly decline of approximately 0.5%. The broader market performed relatively better, with the Nifty Midcap 100 ending the week roughly flat and the Nifty Smallcap 100 gaining more than 1% and reaching a fresh all-time high.
This divergence suggests that investor interest remains strong in parts of the broader market even as large-cap benchmarks face pressure from global macroeconomic risks.
What investors will watch next
The direction of Indian equities in the coming week could depend heavily on crude oil prices and developments in the US-Iran situation. Bajaj Broking’s Pabitro Mukherjee said investors would closely track both factors for further market direction.
The continued FPI buying is nevertheless an encouraging development for Indian markets. If foreign investors maintain their buying streak while domestic institutions continue providing support, it could help stabilise equities.
However, the large cumulative FPI outflow for 2026 shows that the recent buying should not yet be interpreted as a complete reversal of the year’s foreign-investor trend. For now, the Indian market remains caught between improving foreign flows on one side and crude oil, geopolitical risks and global uncertainty on the other.
Source: ET Now
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