FPIs turn net buyers in Indian equities in first fortnight of July 2026

FPI BUYING RETURNS IN FIRST HALF OF JULY 2026

After heavy FPI selling of $(6.70) billion in the first half of June, the first fortnight of July 2026 saw FPIs turning net buyers to the tune of $1.62 billion. While the selling was still evident in Autos, Capital Goods, Telecom, and Power; there was concerted buying in sectors like Consumer Services, Metals & Mining, Healthcare, Consumer Durables, and Realty. FPI equity AUC (assets under custody) bounced marginally to $724 billion as of mid-July 2026, while overall AUC of equity and debt bounced to $804 billion; still lower than September 2024 peaks. FPIs have turned optimistic; albeit, not bullish on India!

Data Source: NSDL

FPI TRIGGERS: WHY FPIs TURNED NET BUYERS IN H1-JULY

• Despite the resumption of hostilities between the US and Iran, the market view was that the hostilities should be short-lived and impact on supply chains limited.

• India had largely diversified its sourcing of oil and natural gas in the last few months, adding Africa, Russia, and Latin America to its supplier list to de-risk supply chains.

• Quarterly results for the March 2026 quarter and the June 2026 quarter have affirmatively exhibited the resilience of corporate India’s performance.

• The global investors may still be worried about lack of AI candidates in India, but will appreciate the fact that the probability of rate hikes by the RBI was fairly low.

SECTORAL FPI FLOWS IN JULY 2026 (FIRST FORTNIGHT)

A total of 15 out of the 23 sectors listed by NSDL saw net FPI buying in H1-July 2026.

• Consumer Services saw some net buying of $765 million by FPIs in H1-July. This can be attributed to concerted buying in the new-age ecommerce players in India.

• Metals and Mining saw net buying of $623 million in the first fortnight of July, amid global commodity price spike and a bigger focus on rare earth mining in India.

• Two defence plays (healthcare and consumer durables) saw combined net buying of $674 million, as domestic demand came back to dominate the investor narrative.

• With low rates expected to continue for now, BFSI and realty saw combined buying of $421 million in H1-July, with realty also likely to see record housing offtake.

• On the sell side, automobiles saw bulk of the offloading at $(721) million; as supply chain constraints, steep valuations, and weak rural demand put a cap on flows.

• Capex spending continues to be a question mark with power, capital goods and telecom seeing combined net selling in H1-July of close to $(663) million.

The general FPI approach since September 2024 has been to use every bounce in the market to lighten positions in India. These monies were being reallocated to AI plays like Taiwan, Korea, and China. With the focus coming back to ROI on AI, the billion-dollar question is; whether the FPI flows will also revert back to India?