The August inflow, following Rs 20,200 crore of buying in July, marks a sharp reversal from the prolonged selling spell. The change comes amid improving corporate earnings, resilient economic activity, a stable rupee and easing geopolitical concerns.
However, the weekly flows tell a different story. FIIs stayed net sellers for the second consecutive week during the period under review, offloading Rs 2,060 crore worth of Indian equities. Domestic institutional investors (DIIs), meanwhile, extended their buying streak with net purchases of Rs 19,309 crore.
Over the past month (28th July to 28th August), FIIs bought through the first three weeks before turning sellers in the final two, ending the stretch with net purchases of Rs 8,092 crore, while DIIs stayed net buyers across the entire stretch, absorbing the foreign selling pressure with net inflows of Rs 56,737 crore, according to Pabitro Mukherjee, Deputy Vice President-Research, Bajaj Broking.
The divergence between foreign and domestic institutional flows has remained pronounced, with DIIs continuing to absorb selling pressure from overseas investors.
Further, the monthly turnaround comes with a caveat. FPIs remain net sellers in Indian equities in 2026, with cumulative withdrawals of Rs 2.23 lakh crore so far—already well above the Rs 1.66 lakh crore they pulled out during all of 2025. With foreign flows now positive for two consecutive months, the key question is whether the latest buying marks a sustained shift or a pause in the broader sell-off.
Will FPIs buy or sell Indian equities?V K Vijayakumar, Chief Investment Strategist, Geojit Investments, said the recent direction of FPI flows could be influenced by the reversal of the chip trade, rupee stability and improving earnings growth in India.
“The important factors driving FPI flows into India are the reversal of the chip trade, stability in the rupee and more importantly, improving earnings growth in India. A significant trend in FPI investment in India recently is the direction of flows towards the SMIDs (mid- and small-caps). Growth and earnings momentum are much higher in the SMIDs compared to the large-caps. This trend of FPI investment in SMIDs is likely to continue.”
The recent foreign buying has also been accompanied by a shift in the segment of the market attracting overseas flows, with mid- and small-cap stocks gaining attention.
Market remains under pressure despite monthly FPI inflows
The broader market, however, continued to face pressure during the week. Benchmark indices extended their decline for the third consecutive week as higher crude oil prices and continued geopolitical concerns weighed on investor sentiment.
With limited directional triggers, investors remained focused on sectoral rotation and stock-specific opportunities. The Nifty started the week on a positive note and touched an intra-week high of 24,378 on Wednesday. However, it surrendered its gains in the second half of the week and slipped to an intra-week low of 24,076.
The index eventually closed at 24,175, down 0.3% for the week.
Looking ahead, investors will watch global commodity prices, geopolitical developments and key macroeconomic data for cues on institutional flows.
“In the coming month, investors will closely monitor movements in Brent crude prices and developments surrounding US-Iran tensions. Escalating US-Canada trade tensions could further add to market uncertainty and keep investors cautious. Meanwhile, elevated US bond yields remain a key concern, with markets awaiting upcoming inflation data ahead of the Federal Reserve’s policy meeting in mid-September. On the domestic front, Q1 GDP growth and inflation data will remain the key economic indicators to watch for Institutional flows,” said Mukherjee.
ALSO READ: Warren Buffett turns 96: Top 10 investing lessons from the Oracle of Omaha
Nifty technical setup remains balanced
Hariselvan Radhakrishnan, Founder & CEO of HST Wealth, a SEBI-registered Research Analyst firm, said investors will have several important domestic and overseas macroeconomic releases to track in the coming week.
“A series of important domestic and overseas macroeconomic releases will be in focus this week, with investors looking for fresh direction after a largely range-bound market. India’s first-quarter GDP data on Monday will offer insights into the domestic growth trajectory, while Friday’s U.S. non-farm payrolls report is expected to influence global market sentiment as investors reassess expectations for the Federal Reserve’s September policy decision following Kevin Warsh’s hawkish Jackson Hole address.”
On the technical front, Radhakrishnan said the Nifty remains in a consolidation phase with a positive bias. For now, the technical picture remains finely balanced. On the weekly timeframe, the Nifty continues to remain in a consolidation phase with a positive bias. The index closed above its 20-week moving average at 24,036, keeping the medium-term uptrend intact. However, it remains below the 100-week moving average at 24,423, which has continued to act as a key resistance level and capped advances during the quarter. “The weekly RSI at 50.07 remains in neutral territory, while the MACD has recovered from negative levels. Momentum is showing signs of improvement, although a decisive acceleration is yet to emerge.”
He added that the weekly chart is forming a potential rising-three pattern.
“The weekly chart is also forming a potential rising-three pattern, which generally represents a pause within an existing uptrend that typically resolves upward. The pattern would gain confirmation on a sustained close above the 24,190–24,335 zone, opening the way towards 24,710. Conversely, a close below 24,000 would invalidate the setup and could lead to deeper weakness.”
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
