FII Outflows Ease Sharply In July, Strong DII Buying And Better Sentiment Support Indian Markets

Mumbai: Foreign institutional investor (FII) selling in Indian equities continued to slow in July, signalling a gradual improvement in overseas investor confidence. According to provisional exchange data, net FII outflows fell sharply to Rs 5,780 crore in July, the lowest monthly outflow recorded in 2026.

The latest figures show a steady decline in selling pressure over the past five months. Net outflows reduced from Rs 1,22,540 crore in March to Rs 70,140 crore in April, Rs 55,960 crore in May, Rs 49,030 crore in June, and finally Rs 5,780 crore in July.

Market experts said the sharp moderation in FII selling reflects improving sentiment towards Indian equities.

According to Pabitro Mukherjee, Deputy Vice President – Research at Bajaj Broking, overseas investors turned net buyers during several trading sessions in the final week of July. FIIs made net purchases of Rs 5,950 crore during the week, marking a notable shift after months of sustained selling.

The return of foreign buying indicates growing confidence in India's economic fundamentals and corporate earnings outlook.

Domestic institutional investors (DIIs) remained strong buyers throughout 2026, helping absorb foreign selling.

In July alone, DIIs invested Rs 35,100 crore in Indian equities. During the last week of the month, they purchased shares worth Rs 5,390 crore, providing steady support to the market.

Analysts believe consistent domestic inflows have played an important role in keeping equity markets resilient despite global uncertainty.

According to Vinit Bolinjkar, Head of Research at Ventura, the benchmark Nifty 50 ended the week at 24,366, supported by improving foreign flows and continued domestic buying.

He noted that while the USD/INR remained around 95.42 and Brent crude traded near USD 87 per barrel, investors should continue monitoring imported inflation risks.

Looking ahead, market participants will closely watch crude oil prices, the ongoing US-Iran geopolitical situation and foreign investment trends. Analysts believe the near-term outlook for Indian equities remains constructive, backed by healthy earnings growth, improving liquidity and sustained institutional participation.