Global funds have once again turned their attention to the Indian stock market. According to my data, during the trading week from July 5 to July 9, foreign investors poured $1.3 billion into Indian securities. This is the largest weekly inflow since June 2025.
Throughout 2026, foreigners actively withdrew capital from India. From January to May alone, the outflow from local equities amounted to about $21 billion. However, the dynamics have now changed dramatically. Already on Friday, July 10, foreign funds purchased $272 million worth of Indian securities on the domestic market.
Notably, in the two weeks leading up to June 30, foreign investors invested around $1.5 billion in shares of Indian banks and financial companies. According to the National Securities Depository, the Indian banking sector saw a net inflow of $357 million in June — fully offsetting the sales of previous months.
What changed investor sentiment?
The turning point coincided with key decisions by the Reserve Bank of India (RBI). The regulator opened dollar-rupee forwards for new FCNR (B) deposits, making such deposits more attractive to foreigners. Additionally, starting April 1, 2026, authorities abolished the capital gains tax for foreign portfolio investors on the sale and income from government bonds.
Goldman Sachs has already revised its outlook on the Indian market to a positive one. Bank analysts note that global funds still have significant room to return to Indian equities due to a substantial underweight in their portfolios. According to their assessment, despite lingering concerns about downward earnings forecasts, growing certainty about the domestic recovery could serve as an incentive to price in the upcoming upturn early.
Moreover, experts expect the Nifty 50 index to reach 26,500 points by June 2027 — roughly 10% above current levels.
My comment. The return of foreign capital to India is a powerful signal for global markets. The combination of tax incentives, currency stability, and clear growth forecasts makes Indian assets among the most attractive in Asia. If the RBI continues its flexible policy, we will see further strengthening of the rupee and growth in stock indices. For crypto investors, this is an indirect positive factor: the strengthening of traditional markets often boosts risk appetite in digital assets as well.