Indian equities are showing signs of stabilisation after posting over 1% back-to-back returns in June and July. According to The Economic Times, FPIs invested around ₹20,000 crore in Indian equities in July, followed by another ₹12,921 crore in the first week of August. Ritesh Taksali, Chief Investment Officer at Edelweiss Life Insurance, attributes this reversal to several key concerns that had weighed on global markets—trade tariffs, geopolitical tensions and the reverse AI trade—either playing out or receding. The recent correction in headline indices has helped clean up valuations to some extent, though pockets of froth remain in stocks where expectations of very strong growth are already fully reflected in prices.
The Q1 earnings season has been better than expectations, with sales growth at 22% year-on-year and profit growth at 11% year-on-year. As reported by The Economic Times, barring OMCs, earnings season has seen a broad-based beat across sales, EBITDA and PAT. Margins have been more resilient than expected, with companies able to offset meaningful part of supply-chain disruptions and elevated input costs through price increases, cost rationalisation, and operating efficiencies. Management commentary suggests that business environment is expected to improve in H2 as cost pressure abates and festive season kicks in, with demand visibility improving as geopolitical uncertainty eases.
Foreign institutional investors have turned net buyers in July 2026 for the first time since February, purchasing shares worth ₹20,200 crore. Their buying spree continued in August, with FIIs purchasing shares worth ₹17,275 crore so far this month, according to data from the National Securities Depository Limited (NSDL). Meanwhile, overseas investors increased their stakes for the fourth consecutive quarter in 33 NIFTY500 companies at the end of the first quarter of the current financial year (Q1 FY27), data from Ace Equity showed. Prominent names include Hitachi Energy (stake increased to 12.44% from 11.68%), Siemens Energy (7.72% from 4.79%), Waaree Energies (8.57% from 2.68%), Indian Bank (6.16% from 4.54%), and Bank of Maharashtra (5.82% from 1.89%).
Several companies among the FII-favoured stocks delivered impressive Q1 results. Hitachi Energy reported a 123% surge in net profit to ₹294 crore from ₹132 crore year-on-year, with revenue rising 69% to ₹2,494 crore. The company's EBITDA grew 135% to ₹364 crore with margin improvement of 4.1 percentage points to 14.58%. Siemens Energy saw net profit jump 68% to ₹441 crore from ₹263 crore, while revenue advanced 39% to ₹2,486 crore. The company's order backlog rose 16.4% to ₹19,331 crore and EBITDA margin improved by 4.4 percentage points to 23.55%. Waaree Energies reported a 14% surge in consolidated net profit to ₹850 crore with revenue increasing 79% to ₹7,932 crore. The company's EBITDA grew 44% to ₹1,440 crore.
India's valuation premium has become more reasonable with the Nifty's trailing P/E now around 20.8x—below its seven-year median and 10-year average. According to The Economic Times, India's weight in the MSCI EM index has moderated from a peak of around 19.4% in late 2024 to its long-term average of around 11.8%. The global opportunity set has changed, with markets such as Brazil and other commodity-oriented EMs becoming relatively more attractive, contributing to a broad re-rating and narrowing of India's relative valuation advantage. However, India's premium remains justified to an extent by the quality and diversity of its growth, with the country offering relatively diversified exposure across financials, consumption, manufacturing, infrastructure and services.
