Indian equities are anticipated to extend recent gains in August, driven by renewed foreign fund inflows and the unwinding of AI-skewed trade. Analysts expect the Nifty to continue its upward trajectory after consolidation, despite lingering geopolitical uncertainties in West Asia.
Foreign portfolio investors (FPIs) became net buyers in Indian equities in July, investing Rs 20,200 crore after four months of outflows. Attractive valuations, improving corporate earnings, and a better global investment environment, including stability in the rupee and large-cap stocks, drove the comeback.
The Indian rupee gained 0.1% against the US dollar on Thursday, opening at 96.49, despite facing pressure from rising crude oil prices. Traders expect continued strain, with the Reserve Bank of India (RBI) intervention anticipated to limit sharper losses. Geopolitical tensions are driving oil prices higher, offsetting previous RBI measures.
Foreign investors are increasingly favoring Indian bonds over equities, driven by India's removal of tax on overseas bond investors and the anticipated inclusion in the Bloomberg Global Aggregate Bond Index by early 2027. This move is expected to attract $25-27 billion in inflows by FY2028, helping narrow India's balance of payments deficit and shore up the rupee.
Foreign investors have invested over $1 billion in Indian equities in the past week, signaling a bullish trend. Goldman Sachs and Citigroup project further inflows due to a stable rupee and improved earnings expectations, boosting the NSE Nifty 50 index.
The Indian Rupee depreciated 39 paise against the US dollar, opening at 95.72 and falling to 95.77 due to soaring crude oil prices and escalating Middle East tensions. Concerns over global crude supply disruptions, fueled by Iran's actions in the Strait of Hormuz, dampened market sentiment.
Foreign portfolio investors (FPIs) have shifted from debt to equities in July, investing $2.59 billion in the first 10 days. This marks a significant sentiment change from earlier in the year, driven by a steady rupee and a shift from semiconductor investments.
Markets are poised for a week driven by Q1 earnings, inflation data, and Middle East tensions. Key indicators include India's CPI and WPI, US inflation figures, and crude oil prices, alongside FII activity.
The Indian Rupee strengthened by 15 paise against the US dollar on Tuesday, opening at 95.33 and reaching 95.28. This rise was attributed to lower crude oil price expectations, particularly Saudi Arabia's significant price cut for Asian buyers, and reduced Middle East risk premium.
Dalal Street closed higher on Thursday, with Sensex and Nifty gaining nearly 1%. The rally was driven by a sharp rise in IT stocks and falling crude oil prices, supported by India-Japan strategic agreements.
Foreign Portfolio Investors (FPIs) withdrew Rs 49,340 crore from Indian equities in June, pushing total outflows for 2026 to Rs 2.7 lakh crore. This was driven by global risk aversion, US yields, and valuation concerns, though a US-Iran peace deal later eased selling. FPIs, however, invested in Indian debt.
Rohit Seksaria of Sundaram Mutual sees Indian equities entering a constructive phase due to falling crude oil prices easing inflation and currency concerns. He anticipates a temporary earnings dip but expects banks and NBFCs to lead a rebound, with opportunities in data centers, hospitals, niche IT, and auto ancillaries.
Indian equities may rebound due to attractive valuations and improved currency stability, according to JM Financial's Deepak Gupta. Manufacturing and healthcare are favored sectors, while oil & gas and IT services face caution. Financials are in a 'sweet spot'.
Indian equities saw a significant drop on Friday, ending a five-day rally. Heavy selling in IT stocks, influenced by Accenture's revised guidance, and weak global cues, including the cancellation of US-Iran peace talks, led to substantial declines in the Sensex and Nifty.
The Indian rupee depreciated by 2 paise to close at 94.60 against the US dollar on Tuesday, halting a two-session gain. Despite easing crude oil prices and optimism over a US-Iran peace deal, foreign capital outflows from Indian equities capped the rupee's rise.
Indian stock markets, Sensex and Nifty, rose for the third consecutive session on Tuesday, driven by positive global trends, foreign fund inflows, and easing crude oil prices following a reported US-Iran peace deal. The Sensex closed up 0.71% at 76,808.48 and Nifty 50 rose 0.57% to 23,989.15.
Indian equity markets face near-term pressure from the West Asia conflict, with the June quarter expected to be challenging due to elevated fuel prices and a delayed monsoon. Despite potential FY27 estimate downgrades, corporate earnings remain resilient. Financials are seen as an attractive sector with accelerating credit growth, while long-term opportunities lie in capital goods, renewable energy, and energy transition themes.
Sandeep Neema of PL Asset Management advises Indian investors to focus on improving fundamentals rather than weak sentiment, highlighting opportunities in financials, metals, power, and pharma for long-term gains.
Indian equities have outperformed other asset classes long-term, beating inflation by 7-9% on average, according to FundsIndia's Wealth Conversations Report May 2026. Nifty 50 TRI has shown consistent positive returns over 7 years.
Foreign institutional investors (FIIs) are unlikely to return to Indian equities soon due to modest dollar returns, the AI revolution favoring other markets, and tax changes. A comeback may occur if valuations hit rock bottom, IPO activity surges, or global markets overheat.
Foreign investors have withdrawn Rs 27,048 crore from Indian equities this month, continuing a trend that has seen Rs 2.2 lakh crore exit in 2026. Global macroeconomic uncertainty, geopolitical tensions, and a strong US dollar are cited as key drivers.
Jewellery stocks saw a sharp decline on Monday. Prime Minister Narendra Modi appealed to citizens to reduce gold purchases. This call aims to preserve foreign exchange reserves. Major jewellery companies experienced significant drops in their share prices. Investors reacted quickly to the potential demand impact. Indian equities opened lower amid global concerns.
Foreign portfolio investors have withdrawn over Rs 2 lakh crore from Indian equities in 2026, with May seeing further outflows of Rs 14,231 crore. Persistent global macroeconomic uncertainties, including inflation and interest rate concerns, are driving this trend, making developed market debt more attractive. Despite overall selling, some selective interest remains in specific sectors and growth-oriented mid and small-cap stocks.
Foreign investors are significantly reducing their stake in Indian equities, with FII ownership hitting a multi-year low. Concurrently, domestic institutional investors, particularly mutual funds fueled by SIPs, are increasing their holdings, absorbing much of the foreign selling and reshaping market ownership.
