Foreign investor selling in Indian equities likely over: Goldman Sachs
Synopsis
Goldman Sachs has flipped its India call — from underweight to cautiously optimistic. After a record $30 billion in foreign selling over three-and-a-half months, overseas investors have quietly turned net buyers. With FIIs already pumping ₹15,157 crore into Indian markets in July and Nifty targeted at 26,500 by June 2027, the tide may be turning faster than the Street expected.
Key Takeaways
Goldman Sachs says foreign selling in Indian equities is likely over as of 13 July 2026 .
Global investors offloaded a record $30 billion in Indian equities over roughly three-and-a-half months in the first half of 2026.
Overseas investors have since turned modest net buyers, bringing in around $2 billion — largely into financial stocks — since mid-June 2026 .
FIIs are net buyers of ₹15,157 crore in July so far.
Nifty 50 is projected to reach 26,500 by June 2027 , implying nearly 10% upside from current levels.
Global funds remain significantly underweight on Indian equities, leaving room for further allocation increases.
Foreign selling in Indian equities is likely a thing of the past, with improving domestic fundamentals and historically light overseas investor positioning set to support a gradual return of foreign capital, according to a fresh analysis by Goldman Sachs released on 13 July 2026. The assessment marks a significant pivot in the investment bank's stance on Indian markets.
A Shift in Goldman Sachs' Outlook
The latest Goldman Sachs report represents a notable departure from the firm's position in May 2026, when it had characterised the risk-reward profile of Indian equities as less attractive than that of North Asian markets and had not anticipated a swift return of foreign capital even if crude oil prices eased. Investor sentiment towards Indian equities is now expected to turn incrementally positive, the report said, despite renewed geopolitical tensions in West Asia that could keep markets volatile in the near term.
Nifty 50 Target and Upside Potential
The Nifty 50 index is projected to climb to the 26,500 mark by June 2027, implying an upside of nearly 10% from current levels, according to Goldman Sachs analysts. The benchmark's recovery trajectory, they argue, hinges on improving visibility into India's broader economic rebound — which could prompt global funds to price in a turnaround ahead of actual data confirmation.
Record FII Outflows Followed by a Reversal
Global equity investors used India as a funding market during the first half of 2026, offloading a record $30 billion worth of Indian equities over roughly three-and-a-half months. However, the tide began turning around mid-June 2026, with overseas investors shifting to modest net buying and channelling approximately $2 billion back into Indian markets — largely concentrated in financial stocks.
Separately, foreign institutional investors (FIIs) turned net buyers to the tune of ₹15,157 crore in July so far, underscoring the nascent but tangible shift in sentiment.
Why Global Funds Stayed Away — and What Could Bring Them Back
Goldman Sachs analysts noted that global funds remain significantly underweight on Indian equities, leaving considerable room for allocation increases if confidence in the domestic recovery strengthens. Earnings downgrades and valuation concerns have continued to weigh on sentiment, but improving economic signals could accelerate re-entry. Notably, earlier anxieties over the potential impact of artificial intelligence (AI) on India's IT-heavy equity market had also dampened investor enthusiasm in preceding months.
What to Watch Next
The key variables for a sustained foreign capital return include the pace of India's earnings recovery, the trajectory of crude oil prices — which directly affect India's current account — and any escalation in West Asia tensions. Analysts at Goldman Sachs suggest that if domestic macro visibility improves, a more decisive re-rating of Indian equities by global funds could follow well ahead of the June 2027 Nifty target date.
Point of View
The bank saw Indian equities as less attractive than North Asian peers; by July, it is projecting a 10% Nifty rally. The speed of the pivot suggests the earlier underweight was partly positioning-driven — and the $30 billion outflow may have overcorrected valuations. The real risk now is that the recovery thesis gets priced in before earnings actually deliver, leaving latecoming FIIs exposed if India's macro visibility disappoints. West Asia tensions add an oil-price wildcard that Goldman Sachs itself flags but cannot fully model.
NationPress
13 Jul 2026
Frequently Asked Questions
Why does Goldman Sachs now believe foreign selling in Indian equities is over?
Goldman Sachs points to improving domestic fundamentals and extremely light overseas investor positioning as key reasons. Since mid-June 2026, foreign investors have already turned modest net buyers, channelling around $2 billion back into Indian markets, primarily into financial stocks.
What is Goldman Sachs' Nifty 50 target and by when?
Goldman Sachs projects the Nifty 50 index will rise to 26,500 by June 2027, implying an upside of nearly 10% from current levels. The bank says improving visibility on India's economic recovery could prompt investors to price in this turnaround ahead of time.
How much did foreign investors sell in Indian equities in 2026?
Global equity investors sold a record $30 billion worth of Indian equities over roughly three-and-a-half months in the first half of 2026, using India as a funding market during that period.
How much have FIIs invested in Indian equities in July 2026?
Foreign institutional investors (FIIs) turned net buyers to the tune of ₹15,157 crore in July 2026 so far, reflecting the nascent reversal in overseas investor sentiment.
What risks could delay the return of foreign capital to Indian equities?
Goldman Sachs flagged renewed geopolitical tensions in West Asia, ongoing earnings downgrades, and valuation concerns as near-term risks. Earlier worries about the impact of artificial intelligence on India's IT sector had also limited investor enthusiasm in preceding months.
