Foreign capital returns to India: a record inflow of $1.3 billion in a week
Global funds have made a powerful pivot towards the Indian stock market. During the period from July 5 to July 9, foreign investors poured $1.3 billion into Indian securities, marking the largest weekly capital inflow since June 2025. This is a signal that cannot be ignored: risk appetite is returning to emerging markets, and India is once again in the spotlight.
I note that from January to May 2026, foreign funds were actively withdrawing from India, taking about $21 billion out of the market. However, the dynamics have changed dramatically. Already on Friday, July 10, domestic market purchases amounted to $272 million. June was particularly telling, when India's banking sector saw a net inflow of $357 million. This completely offset the sales volumes of previous months.
What triggered the reversal? RBI actions and tax reform
The key catalyst was the measures taken by the Reserve Bank of India (RBI). The regulator opened dollar/rupee currency swaps for new FCNR (B) deposits, making them attractive to non-residents. Additionally, starting April 1, 2026, authorities abolished the capital gains tax for foreign portfolio investors on the sale of government bonds. This is a direct incentive for entry.
Goldman Sachs analysts have already revised their outlook on the Indian market to a positive one. According to their estimates, global funds still have significant room to increase their share in Indian assets — current allocation remains below historical norms. The bank's experts expect the Nifty 50 index to reach 26,500 points by June 2027, which is approximately 10% above current levels.
Expert opinion: The capital inflow into Indian stocks is not just a local surge, but part of a global trend of funds shifting from overheated Western markets to Asia. The stability of the rupee and clear tax signals from the government create a foundation for sustainable growth. For crypto investors, this is an important indicator: if traditional Asian markets are gaining momentum, interest in Asian digital assets could also increase significantly.