Foreign investors turned net buyers in June but began pulling back in early July amid global uncertainty and profit booking.
Foreign investors put in Rs 14,590 crore in the country's equity market in June, marking the third straight month of investment, supported by improving global liquidity conditions, easing geopolitical tensions, and a rate cut by the Reserve Bank of India.
However, foreign portfolio investors (FPIs) turned net sellers in July and pulled out Rs 1,421 crore in the first week of the month, data with the depositories showed.
Going forward, in the near term, FPI flows are expected to remain choppy on account of tariff deadline developments and US data volatility, Vaqarjaved Khan, Senior Fundamental Analyst, Angel One, said.
In addition, FPIs buying will hinge on Q1FY26 result indications. "If the results indicate earnings recovery, that will be positive. Disappointment on these factors can impact the market and, thereby, flows," V K Vijayakumar, Chief Investment Strategist, Geojit Investments, said.
According to the data with the depositories, FPIs made a net investment of Rs 14,590 crore in equities in June.
This positive momentum follows a net investment of Rs 19,860 crore in May and Rs 4,223 crore in April. Prior to this, FPIs had pulled out Rs 3,973 crore in March, Rs 34,574 crore in February, and a substantial Rs 78,027 crore in January.
With this, FPIs' outflow stood at Rs 79,322 crore in 2025 so far.
"FPIs exhibited a cautious yet improving stance in June 2025, beginning the month with notable outflows from the equity markets driven by elevated US bond yields, trade tensions, overvalued Indian stocks and deteriorating geopolitical environment," Himanshu Srivastava, Associate Director, Manager Research, Morningstar Investment, said.
However, sentiment shifted towards the later part of the month as global liquidity conditions improved, geopolitical tensions eased, the RBI cut rates, the rupee strengthened, and oil prices stabilised, he added.
In the second half of June, FPIs were buyers in financials, autos and auto components, and oil and gas sectors, while they turned sellers in capital goods and power.
On the other hand, FPIs pulled out Rs 6,121 crore from the debt general limit and Rs 6,366 crore from the debt voluntary retention route during the period under review.