Intelligence Analysis: Foreign Capital Poised for Strategic Re-Entry into Indian Markets Following Prolonged Exodus

Elite News Bureau Intelligence Report: A comprehensive analysis of capital flows indicates a potential inflection point in foreign investment strategy toward India. Foreign Portfolio Investors (FPIs) executed a significant divestment campaign through early 2026, net selling approximately ₹35,000 crore in equities. This activity extends a broader retreat initiated in 2025, during which FPIs offloaded a staggering ₹1.7 lakh crore in holdings. The sustained capital outflow exerted pronounced downward pressure on the Indian rupee, which depreciated over 6% from January 2025 despite aggressive intervention by the Reserve Bank of India. This recalibration by global funds, often a precursor to strategic repositioning, suggests a cyclical reassessment of risk-adjusted returns. Current market valuations, combined with India's robust long-term macroeconomic fundamentals, are now creating a compelling entry thesis for institutional capital. Intelligence suggests that sophisticated foreign funds are likely concluding their risk-off phase and are preparing to re-engage with select Indian assets, signaling a potential reversal in sentiment and capital flow direction for the latter half of 2026.