Foreign portfolio investors (FPIs) have returned to buying Indian equities for a second straight month, marking the first such two-month buying streak since November. Nearly $5 billion has flowed into Indian stocks across July and August, according to the report, although the buying remains selective rather than broad-based.

The development marks a shift in foreign investor behavior toward Indian markets. FPIs are overseas investors — including funds, institutions, and other entities — that allocate capital to Indian financial assets such as equities and debt. Their flows are closely tracked by market participants because they can significantly influence liquidity and price movements in Indian markets, where benchmark indices such as the Nifty 50 and the Sensex are widely watched barometers of sentiment.

FPI activity in India is regulated by the Securities and Exchange Board of India (SEBI), and flow data is tracked by market infrastructure institutions such as the National Securities Depository Limited (NSDL). Periods of sustained FPI buying have historically accompanied rallies in Indian equities, while extended selling stretches have coincided with market pressure. For readers following the trend going forward, NSDL's regularly published flow data offers a way to see whether the current streak extends into subsequent months or reverses.

That the current inflows come after a period of inconsistent foreign participation underscores the significance of back-to-back positive months. Still, the report notes that the nearly $5 billion deployed over July and August has been selective, indicating foreign investors are not uniformly adding exposure across the market — meaning the aggregate inflow figure may not reflect uniform strength across sectors or individual stocks.

Source: CNBC-TV18