A $2.5 billion FII buying has domestic investors asking. Is foreign money shifting to India?

Foreign institutional investors pumped around 2.5 billion dollars into Indian equities in July, but analysts caution this is a tactical return rather than a confirmed trend reversal. The buying was supported by easing geopolitical concerns, expectations of a less aggressive US Federal Reserve, attractive valuations after the recent correction, cooling crude oil prices, and rupee recovery from May lows. While India's diversified growth story across banking, consumption, autos and manufacturing remains intact, India is still among the more expensive large emerging markets, and most market participants want sustained flows over several weeks before declaring the FII selling cycle over.