Foreign capital returns to India: record weekly inflow of $1.3 billion
Foreign funds made the strongest capital injection into the Indian stock market in the past year. In the week from July 5 to 9, the volume of purchases amounted to $1.3 billion — the largest weekly inflow since June 2025. The trend has clearly reversed.
After a prolonged period of outflows, when from January to May 2026 foreign investors withdrew about $21 billion from Indian stocks, the situation has changed dramatically. In just one day, July 10, non-residents purchased securities worth $272 million on the domestic market. The preceding two-week period also showed strong activity: about $1.5 billion was invested in shares of Indian banks and financial companies.
RBI Policy as a Catalyst for the Return
The key driver of the sentiment reversal was the decisive measures of the Reserve Bank of India (RBI). The regulator opened dollar/rupee forward contracts for new FCNR (B) deposits, making these instruments significantly more attractive to foreigners. Concurrently, from April 1, 2026, authorities abolished the capital gains tax for foreign portfolio investors on the sale of government bonds or income received from them.
These steps sent an obvious signal to the market. According to data from the National Securities Depository, the net inflow into India's banking sector in June amounted to $357 million, fully offsetting the sales of previous months.
Goldman Sachs Forecasts: Upside Still Ahead
Goldman Sachs analysts see significant potential for further growth. According to their estimates, the share of foreign investments in Indian assets remains historically low, meaning there is room to increase positions — especially amid the stability of the rupee and clearer yield forecasts.
"Global funds still have a large reserve for returning to Indian stocks due to significant underweight in their portfolios. Growing certainty about the domestic recovery could serve as an incentive for market participants to start pricing in the upcoming rise in advance," the bank's report notes.
Additionally, experts expect the Nifty 50 index to reach 26,500 points by June 2027 — approximately 10% above current levels.
Cryptalist Comment: The return of foreign capital to India is not just a reaction to tax incentives. It is a systemic signal: the Indian market is becoming a beneficiary of the global liquidity shift from overheated Western assets toward Asia. For crypto investors, this is indirectly a positive factor — the stabilization of fiat markets and reduced fear of a "hard landing" for the economy ease pressure on risk assets, including digital ones. We are monitoring the dynamics.