FPI net buy Indian Equities worth of $3.11 Billion in August 2026

AUGUST 2026 REINFORCES FPI FLOW HOPES

August reinforced hopes of a turnaround with FPI net buying of $3.11 billion. This comes on top of the $2.10 billion net buying in July. However, this only offsets the net selling of $(5.21) billion in June 2026. Therefore, the FPI selling story, which started back in September 2024, has still not effectively changed too much.

Out of the 23 sectors, 13 sectors saw net buying, and 10 sectors saw net selling in August. Net buying was dominated by BFSI, Consumer Services, Healthcare, and IT; while Telecom, FMCG, and Oil & Gas dominated the selling. Buying was once again focused on the sectors that reflect or are proxies for Indian domestic demand.

However, debt market flows were marginally in the negative in August 2026. For the 5 months of FY27; FPIs sold equities worth $(10.34) billion but bought bonds worth $6.32 billion. The debt market inflows were largely on the back of the tax sops provided.

Data Source: NSDL

PUTTING THE AUGUST 2026 FPI ACTION IN PERSPECTIVE

• Now, FPIs have net sold $59 billion of stocks since Sep-24, resulting in FPI equity AUC (assets under custody) falling -20.8% from $931 billion to $737 billion. Overall FPI AUC (including debt) fell -18.8% from $1,007 billion to $819 billion in this period.

• While the situation in the Middle East continued to be fluid, India saw record inflows from the FCNR(B) window of $127 billion. That has given hope of stability in the Indian rupee, which could entice the FPIs to come back into India.

• FPIs have had 2 concerns in recent months. While the AI overhang has abated, there are FPI concerns over the quality of macro data. Secondly, FPIs also estimate that the RBI may be impelled to raise rates if the higher inflation persists.

SECTORAL COLOUR OF FPI FLOWS IN AUGUST 2026

Sectoral FPI flow patterns gravitated towards the domestic demand sectors.

• At $1.10 billion, FPI buying in BFSI bounced back. This was largely driven by the expectation that FCNR(B) flows would abate the cost of funds for Indian banks.

• For the second month in a row, FPI flows into Consumer Services was robust at $882 million. This was led by hospitality, retail, and QSR as domestic demand proxies.

• Two global plays; IT and Healthcare saw net FPI buying of $1.05 billion as the sell-AI and buy-IT trade gathers momentum. Healthcare was a bet on patent expiry story.

• Among other customer-facing sectors, consumer durables and automobiles saw combined net selling of $735 million, again on robust domestic demand drivers.

• In terms of FPI selling, it was prominent in telecom and FMCG, which saw combined net selling of $(723) million on market valuation and margin concerns.

• Among heavy industrials; oil & gas and power saw combined net selling of $(348) million largely on concerns over supply chain constraints; domestic and global.

• FPIs appear to be going slow on metals & mining (still net buyers), as valuation comfort has reduced in terms of the P/E ratio and the dividend yields.

August 2026 was the second successive month of FPI buying, but this comes on the back of nearly 6 quarters of net selling. The next few months could be crucial for FPI flows!