FPI inflows resume in July; metals, consumer services among top buys

Sectors including automobiles & auto components and capital goods see outflows

Foreign portfolio investors (FPIs) are showing signs of a cautious comeback into Indian equities with select sectoral buying in consumer services, metals and mining, and healthcare in the first half of July amid support from high-frequency economic indicators and positive estimates on earnings growth, among others.

 

Consumer services, metals and mining, and healthcare remained the top buys by FPIs in terms of equity investments with net inflows of ₹7,361 crore, ₹5,993 crore, and ₹4,101 crore, respectively, between July 1 and July 15, according to data on National Securities Depository (NSDL).

 

The trend reversal was seen in metals and mining sector which had witnessed an outflow of over ₹4,370 crore in the previous fortnight.

 

Other sectors, such as consumer durables and financials, continued to see net inflows in the first fortnight of July.

 

In the first half of July, net inflows by FPIs stood at ₹15,559 crore compared to ₹14,019 crore in the previous fortnight (June 16 to June 30).

 

FPIs had turned net buyers in the second half of June. However, with escalating tension due to the West Asia conflict, several days in July saw outflows. 

 

Despite that, the net investments by overseas investors stood at ₹11,682 crore as of July 20 — after four consecutive months of outflows.

 

However, sectors, such as the automobiles and auto components and capital goods, continued to witness outflows.

 

Sameer Narayan, head of offshore and alternative investment equity, Aditya Birla Sun Life AMC, said India as an investment venue can behave as an artificial intelligence (AI) antidote for offshore investors.

 

“India offers a well-diversified opportunity (in terms of width, depth and quality) for FPIs. Of late, they have been selling but it has not been much of an ‘India negative' attitude but more on account of money wanting to move back to dollar-denominated assets. Confidence is returning that earnings growth will come back in the range of 16-17 per cent. India, as an asset class, can thus begin to get interesting,” he added.

 

Experts highlight that foreign investors moved capital out of India to fund pure-play AI narrative in Taiwan and South Korea. However, they add the trade is now showing signs of exhaustion with concentration risk triggering valuation fatigue.

 

According to a report by Lighthouse Canton, foreign investors sold around $30.5 billion of South Korean equities in June 2026 alone — the steepest monthly outflow in over 25 years, and an additional $8 billion in July so far. It adds that Taiwan equities saw outflows of $18.4 billion in June and $13 billion in July to date.

 

“This concentrated trade sell-off has a specific implication for India. Capital stepping back from an over-concentrated bet is not capital that has lost interest in Al-linked growth. It is capital actively looking for exposure with a lower-embedded valuation premium and a more durable, order book-backed growth path. India is one of the few markets globally positioned to offer exactly that,” Lighthouse Canton notes in its report.