Global investors have sharply changed course. In just one trading week, from July 5 to 9, foreign funds purchased $1.3 billion worth of Indian stocks. This is the largest weekly capital inflow into the Indian market since June 2025.
The dynamics of July 10 are particularly telling: on Friday, foreign players spent $272 million on purchasing securities in the domestic market. These figures stand in stark contrast to the situation in the first half of 2026, when foreign investors were actively withdrawing funds. From January to May, the outflow from Indian stocks amounted to approximately $21 billion.
The turning point came thanks to a set of measures by the Reserve Bank of India (RBI). The regulator opened dollar/rupee forward contracts for new FCNR (B) deposits, making them more attractive to non-residents. Additionally, starting April 1, 2026, authorities abolished the capital gains tax for foreign portfolio investors when selling government bonds.
The results were not long in coming. Already in June, India's banking sector recorded a net inflow of foreign capital amounting to $357 million — sales from previous months were fully compensated.
Goldman Sachs analysts believe that the current volume of foreign investments in Indian assets is still small, meaning the potential for growth remains. The stability of the rupee and clearer yield forecasts create a favorable backdrop for further capital inflows. The bank's experts expect the Nifty 50 index to reach the 26,500-point mark by June 2027, which is approximately 10% higher than current levels.
It is worth noting that in the two weeks leading up to June 30, foreign investors had already invested about $1.5 billion in shares of Indian banks and financial companies. This indicates that the return of capital is not random but systemic in nature.
Expert commentary: The current trend reversal is a classic example of how sound macroeconomic policy can change the sentiment of global investors. However, for sustainable growth, the Indian market will need not only an attractive tax environment but also confirmation of corporate earnings. If company profit forecasts materialize, we could witness a much larger capital inflow in the coming quarters.