Global funds bought more than $1 billion of Indian equities in the four days through July 9, the biggest weekly purchase since at least June 2025, according to Bloomberg.

Goldman Sachs expects the buying to continue. The bank said that funds’ “underweight positioning” leaves plenty of scope to add, as a stable rupee and clearer earnings prospects pull money back.

Foreign Funds Return to India With $1.3 Billion Equity Buy

Foreign investors spent much of 2026 withdrawing money from India. BeInCrypto reported that they pulled a net $21 billion from Indian equities between January and May 2026.

However, the trend has shifted. Bloomberg reported that foreign investors bought $1.3 billion of Indian equities through July 9. They added an additional $272 million in local shares on Friday.

This came after foreign buyers put roughly $1.5 billion into bank and finance shares over the two weeks ending June 30. 

That buying reversed earlier selling and left the sector with net inflows of $357 million for June, according to National Securities Depository Ltd. data.

How RBI Measures Pulled Capital Back

The shift follows steps by the Reserve Bank of India (RBI) to attract foreign capital. The central bank introduced a US Dollar-Rupee Forex Swap Facility for fresh FCNR (B) deposits.

Tax policy shifted, too. From April 1, 2026, New Delhi will drop the capital gains levy on foreign portfolio investors (FPIs) from the sale or interest of government securities.

Amid these measures, Goldman has also adopted a more optimistic stance.

“With large underweight positioning toward Indian equities, global funds have ample room to neutralize their exposure. While a continued earnings downgrade cycle and still less attractive growth-valuation mix relative to other markets will be key investor concerns, improving visibility on domestic recovery will act as a catalyst for investors to start pricing in the anticipated recovery in advance,” Timothy Moe,co-head of Asia macro research, wrote.

The analysts also see the Nifty 50 climbing to 26,500 by June 2027, about 10% above current levels.

Source: BeInCrypto