Around 93 per cent of this incremental increase was recorded by Category I FPIs, amounting to ₹7.91 lakh crore. While Category II FPIs accounted for the remaining share with ₹58,560 crore. | Photo Credit: iStockphoto

The fortunes of Foreign portfolio investors (FPIs) reversed in FY27 following a bleak FY26. Assets under their custody (AUC) increased around ₹8.5-lakh crore in the April to July period of FY27, recording an increase of 12 per cent from FY26. This is a reversal from the 5.68 per cent decline in assets registered in FY26.

Around 93 per cent of this incremental increase was recorded by Category I FPIs, amounting to ₹7.91 lakh crore. While Category II FPIs accounted for the remaining share with ₹58,560 crore.

The sharp rise is particularly significant because Category I investors are generally regarded as lower-risk, more institutionally regulated and longer-term participants. A larger presence of such investors can deepen Indian markets, broaden the investor base and make the financial system less dependent on more short-term or risk-sensitive foreign capital.

Under SEBI’s FPI framework, Category I includes government and government-related investors such as central banks and sovereign wealth funds, pension funds, appropriately regulated entities such as banks, insurance companies and asset managers, and specified entities from FATF-member countries. Category II comprises investors that do not qualify for Category I, including appropriately regulated funds not eligible for Category I, corporate bodies, family offices and charitable organisations.

Equity was overwhelmingly the biggest component of the increase for Category I AUC at ₹7.25-lakh crore, followed by debt with ₹58,872 crore and hybrid instruments at ₹5,735 crore. Category II, meanwhile, registered ₹53,509 crore increase in equity assets, ₹4,737 crore in debt and ₹277 crore in hybrid assets.

Among Category I FPIs, appropriately regulated funds accounted for ₹4.99-lakh crore of the increase in AUC, while pension funds contributed ₹1.35-lakh crore. Sovereign wealth funds added ₹53,546 crore, while insurance and reinsurance entities contributed ₹31,362 crore. Central banks accounted for ₹18,035 crore.

The biggest Category II gainers were corporate bodies with ₹25,092 crore and unregulated funds structured as limited partnerships or trusts at ₹20,623 crore.

The return may reflect both improving market conditions and a more accommodating regulatory environment. SEBI has progressively eased FPI compliance, including specific relaxations for FPIs investing only in government securities.

Market performance provided another powerful incentive. The Nifty 50 rose from 22,331.40 at the end of FY26’s final trading session on March 30 to 24,383.60 on July 31, an increase of about 9.2 per cent.

While FPIs have turned net buyers in equities in July and August, they had been net sellers in the first three months this fiscal year, amounting to a net outflow of ₹93,319 crore till August 31 in FY27. However net inflows in debt amounting to ₹64,653 crore in the same period appears to have helped their assets.

Published on August 31, 2026