Indian equity markets ended the week marginally lower despite foreign investors buying more than ₹30,000 crore of equities during August 2026. The Sensex fell 0.36% during the week to close at 77,264.51, while the Nifty 50 declined 0.31% to settle at 24,175.65. According to Share.Market, the cautious movement of headline indices masked pockets of strong sectoral buying, with metal stocks emerging as the top gainer of the week, rising nearly 3% on expectations of a stronger global commodity demand cycle. IT stocks emerged as the week's second-best performers, boosted by Friday's global tech rally after Nvidia's strong earnings and guidance, alongside upbeat commentary from US software companies such as Salesforce and CrowdStrike. However, fast-moving consumer goods and automobiles were amongst the top losers as rising input costs raised concerns of margin pressure in those sectors.
Foreign Portfolio Investors (FPIs) continued their buying streak with net purchases of ₹30,919 crore in August 2026, marking the second consecutive month of foreign portfolio investor inflows after ₹20,200 crore in July 2026. According to The Hindu, this represents a sharp turnaround after four consecutive months of heavy selling, with FPIs having withdrawn ₹49,340 crore in June, ₹32,963 crore in May, ₹60,847 crore in April and a massive ₹1.17 lakh crore in March. The two straight months of buying, following the worst six-month stretch in years, offer the first indication of a possible trend reversal. However, foreign investors remain net sellers in Indian equities in 2026, with withdrawals of ₹2.23 lakh crore so far, which is higher than the ₹1.66 lakh crore outflow recorded during the entire 2025. Foreign investor interest also extended to the debt market, with FPIs investing ₹627 crore through the Fully Accessible Route (FAR) and ₹289 crore through the Voluntary Retention Route (VRR), while pulling out ₹2,318 crore through the general route.
Cipla shed 0.45% following the announcement that the US Food and Drug Administration conducted a follow-up current Good Manufacturing Practices inspection at the company's Pithampur manufacturing facility from August 17-25, 2026. According to Business Standard, the company received seven inspectional observations in Form 483 on conclusion of the inspection. Varun Beverages fell 0.90% after the company's board approved incorporation of a wholly-owned Indian subsidiary for ready-to-drink beverages and a joint venture in Tunisia, while also appointing Prathmesh Mishra as CEO & Managing Director.
The BSE 150 MidCap Index gained 0.43% and the BSE 250 SmallCap Index rose 0.55% during the week, while market breadth remained strong with 2,111 shares rising and 817 shares falling on the BSE. However, heavy domestic profit booking and a large pipeline of primary issuances stalled the secondary market's momentum throughout the week, as noted by experts. Globally, India's position remained lacklustre as investors poured into Brazil, Taiwan and Vietnam, while South Korea witnessed aggressive selling. According to Caprize Investment, Vietnam benefited from its FTSE Russell emerging-market upgrade and Taiwan attracted defensive flows into its AI hardware supply chain, while Brazil drew capital on the back of its high interest rates. A Mint poll of 21 economists pegged India's GDP growth at 7.4% for Q1, a four-quarter low, with growth above 7.5% potentially triggering an upward breakout. Easing geopolitical concerns aided risk sentiment, while expectations of softer US interest rates and a rotation of global capital away from the crowded AI and semiconductor trade in markets such as Korea and Taiwan created room for incremental allocations towards India. However, tensions in West Asia and uncertainty over crude oil prices continued to remain an overhang.
Market experts attribute the FPI inflows to Indian equities being a beneficiary of the rotation out of the global 'chip trade' in markets such as Korea and Taiwan, as noted by Jitendra Gohil, CIO – Listed Equities, Bajaj Alts. According to The Hindu, V.K. Vijayakumar, Chief Investment Strategist at Geojit Investments, highlighted that the important factors driving FPI flows into India are the reversal of the chip trade, the stability in the rupee and, more importantly, the improving earnings growth in India. Himanshu Srivastava from Morningstar Investment Research India noted that corporate earnings showed signs of improvement during the June quarter, helping ease concerns around the earnings slowdown that had weighed on foreign investor sentiment earlier. Resilient economic activity and strengthening credit growth also reinforced confidence in India's medium- to long-term growth prospects, as noted by Srivastava. Cash flows suggest returning conviction, while futures suggest lingering caution, with the trend potentially turning post AI and war-related worries receding, as per Manish Bhandari from Vallum Capital. Pabitro Mukherjee from Bajaj Broking highlighted that investors will closely monitor movements in Brent crude prices and developments surrounding US-Iran tensions, while escalating US-Canada trade tensions could further add to market uncertainty. Market watchers remain cautious amid Middle East tensions, crude oil volatility, and elevated US bond yields ahead of the Fed's September policy meeting, with potential US-Canada trade frictions also injecting fresh volatility into the market.
