Foreign investors stepped up buying in Indian equities, with global funds purchasing $1.3 billion worth of shares during the four trading days to July 9, marking the biggest weekly inflow since June 2025. Overseas investors added another $272 million on Friday, extending their buying streak to four consecutive weeks, even as they remain net sellers by about $27 billion in Indian equities so far in 2026.
The renewed inflows come as Goldman Sachs turned bullish on Indian equities, saying it expects strong foreign institutional investor (FII) inflows to return in the second half of 2026. The investment bank forecasts the Nifty 50 will recover to 26,500 by June 2027 and expects large-cap stocks and banks to benefit the most as foreign selling reverses.
Goldman Sachs said a stable rupee, resilient economic growth, healthy corporate earnings and lower commodity prices have improved the outlook for Indian markets. It upgraded the Utilities sector to Overweight while downgrading Metals, Mining and Cement to Underweight, citing monsoon-related weakness and cost pressures.
Despite the return of cash-market buying, foreign investors have largely maintained their bearish positions in derivatives. FII index futures shorts remain elevated at 254,000 contracts, with derivatives positioning staying close to last year’s record bearish levels, raising questions over the sustainability of the recent cash-market rebound.
The cautious derivatives positioning comes even as the MSCI India Index trades near its long-term valuation and price-to-book averages. Meanwhile, broader market sentiment in Asia remained under pressure after South Korea’s KOSPI briefly fell below 7,000, triggering its seventh circuit breaker of the year following renewed US-Iran geopolitical tensions. Foreign investors net sold 2.23 trillion won and institutions sold about 570 billion won, while retail investors bought roughly 2.7 trillion won and the National Pension Service purchased about 220 billion won. The market also triggered a morning program-trading sidecar, taking the year-to-date total to 35 sidecar activations, including 17 buy-triggered and 18 sell-triggered events.
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