Foreign Money Pours Back Into India as Election Jitters Fade

Foreign investors have returned to Indian equities in force at the end of July and the beginning of August, pushing the Nifty 50 index back toward record highs. After weeks of caution following India’s general election, overseas funds have resumed net buying across information technology, financials, and consumer stocks. Local data show foreign institutional investors swinging from heavy net selling in June to several billion dollars of net inflows more recently, helping India outperform many other emerging markets.

The renewed enthusiasm reflects India’s rare mix of strong growth and relatively contained inflation. The IMF’s latest outlook projects India to be among the fastest‑growing major economies in 2026, and recent earnings reports from IT service providers and consumer companies have broadly confirmed that profit momentum remains intact. At the same time, equity valuations are already above long‑term averages, which means further gains depend on the Modi administration’s execution on infrastructure, manufacturing incentives, and regulatory reforms. For Japanese retail investors accessing India via ETFs or mutual funds, the story is attractive but not risk‑free: rupee exchange‑rate swings and potential policy surprises remain key variables to watch.