FPIs net buy $1.74 billion of Indian stocks in first fortnight of Aug-26

FPI BUYING SUSTAINS IN FIRST FORTNIGHT OF AUGUST

The momentum of July sustained in August with FPI net inflows actually up from $1.62 billion to $1.74 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 $743 billion as of mid-August 2026, while overall AUC of equity and debt combined bounced to $824 billion; still much lower than September 2024 peaks. Middle East turmoil is keeping the FPI flows tentative, as a clarity on the situation continues to be elusive.

Data Source: NSDL

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

• While the hostilities continued in the Middle East, the FPIs are now betting that the impact on India could be limited due to its strong domestic demand franchise.

• Concerns over El Nino and the impact on monsoons had been a cause for concern. However, recent data suggests that impact on Kharif output has been limited to 3%.

• There has been aggressive domestic buying in IT stocks, which gained from the AI sell-off. FPIs are also looking at IT closely due to the valuation comfort offered.

• The FCNR(B) deposit mobilization program had been a major success. With $60 billion having come in and around $80 billion expected by 31-Aug (when the window closes), FPIs now have greater confidence that the rupee should bottom out.

SECTORAL FPI FLOWS IN AUGUST 2026 (FIRST FORTNIGHT)

FPIs were net buyers of $1.74 billion in H1-August 2026, which is evident from the fact that 14 out of the 23 sectors listed by NSDL saw net FPI buying in the first fortnight.

• BFSI and Autos saw combined net buying of $1.15 billion by FPIs in H1-Aug. This can be attributed to the RBI holding rates at current levels till the end of 2026.

• On the consumer facing side, consumer services and consumer durables saw net buying of $510 million, a clear bet that domestic demand levers will sustain.

• Two global plays (healthcare and IT) saw combined net buying of $570 million, healthcare saw defensive buying and IT gained from questions over global AI spends.

• Gross buying in Indian equities in the first fortnight of August 2026 stood at $2.55 billion; with focus on low rates, domestic demand, and attractive valuations in IT.

• On the sell side, Telecom saw bulk of the offloading at $(348) million; as valuations appear stretched and FPIs are preparing to allocate to the Jio Digital IPO.

• Capex spending continues to be a question mark with power, capital goods and realty seeing combined net selling in H1-August of close to $(391) million.

The Buy Korea / Taiwan and Sell India trade has paused for now. Korean AI stocks have corrected sharply and FPIs are likely to be cautious. That led to some defensive buying in Indian IT, although a few swallows do not a summer make. The second half of August may be interesting because MPC minutes this week had a strong hawkish undertone!