Foreign Portfolio Investor assets under custody grew 12% to ₹8.5 lakh crore between April and July 2026, driven by stable institutional capital. While recent months show a recovery in buying, FPIs remain net sellers for the 2026 calendar year, highlighting a shift in how they view the Indian market compared to earlier volatility.
Foreign Portfolio Investors (FPIs) have staged a significant turnaround in the first four months of the 2027 fiscal year. After a difficult stretch in the previous fiscal period, the total value of assets held by these investors in India—known as assets under custody—has rebounded by 12%, reaching ₹8.5 lakh crore between April and July 2026.
This recovery is largely driven by Category I institutional investors, such as sovereign wealth funds, pension funds, and central banks. These entities prefer stable, long-term investments and were responsible for about 93% of the total growth during this period. The influx of this 'sticky' capital, which is less likely to exit the market quickly, provides a much-needed layer of stability to the Indian financial system.
Impact of Market Rally and Debt Inflows
The increase in total asset value is not only from new money coming in but also from the appreciation of existing holdings. The Nifty 50 index rose approximately 9.2% between March and July 2026, which naturally increased the value of the stocks already held by these investors. Furthermore, while there was initial volatility in the early months of the fiscal year—leading to net equity outflows—the debt market played a vital role. FPIs invested over ₹64,000 crore in debt instruments during these four months, which helped offset the volatility seen in the equity segment.
A Nuanced Picture of FPI Participation
While the recent growth is a positive signal, it is important for investors to understand the broader context of 2026. Despite being net buyers in July and August—effectively ending a four-month selling streak—FPIs remain net sellers for the calendar year so far, with cumulative equity withdrawals reaching approximately ₹2.23 lakh crore.
This trend shows that foreign investors are still reacting to global factors, such as shifts in demand for artificial intelligence and semiconductor-related markets elsewhere in Asia. Additionally, the Indian market has seen a structural shift in ownership. As of June 2026, domestic mutual funds have for the first time surpassed FPIs in total assets under custody. This rise of domestic institutional investors has provided a strong support base, ensuring that the market remains resilient even when foreign flows are inconsistent.
Future Monitorables
For investors, the key to tracking FPI activity lies in watching global risk appetite and local macroeconomic conditions. Geopolitical tensions and fluctuations in crude oil prices remain external risks that could impact sentiment. While the recent regulatory efforts by the Securities and Exchange Board of India to simplify compliance have encouraged participation in government securities, future inflows will likely remain selective. Investors should continue to monitor corporate earnings and the stability of the rupee, as these factors remain central to how global funds allocate capital to India.