India draws foreign cash while big companies lose value and REIT taxes rise
Foreign buyers return to Indian shares after four months of heavy selling. Half of the ten largest listed firms still shed large market value last week, while property-trust tax relief restores dividend exemptions only as the surcharge jumps.
Economics & Markets··Night
Foreign portfolios return after four months of selling
Foreign portfolio investors bought 16,621 crore rupees of Indian shares in the first fortnight of August. The purchase follows 20,200 crore rupees in July and four consecutive months of heavy selling. Outflows ran to 49,340 crore rupees in June, 32,963 crore in May, 60,847 crore in April and 1.17 lakh crore in March, on CDSL data. Foreign investors are net sellers of about 2.4 lakh crore rupees in 2026, more than the 1.66 lakh crore withdrawn in all of 2025. Market participants attributed the turn to relative valuations, steady corporate earnings, expectations of lower United States rates, softer crude and calmer currency moves. Foreign investors also put 972 crore rupees into debt through the Fully Accessible Route and 69 crore through the general route. The turn does not erase the year's accumulated net selling; it shows only that the first half of August rotated into equities and limited debt buying.[1]
Half of the largest firms lose value
Five of India's ten most valuable listed companies lost a combined 1 lakh crore rupees of market value over the week, while the other five added 55,149.45 crore rupees. The Sensex fell 489.92 points, or 0.62 per cent, over the week and the Nifty 204.65 points, or 0.83 per cent. Tata Consultancy Services lost 34,263.28 crore rupees to 853,506.85 crore, Reliance Industries 31,869.13 crore to 1,770,056.06 crore and State Bank of India 25,891.88 crore to 985,829.96 crore, while HDFC Bank and ICICI Bank also slipped. Life Insurance Corporation of India gained 26,438.49 crore and Bharti Airtel 20,592.13 crore. Elevated crude prices, renewed geopolitical uncertainty and mixed global cues weighed on sentiment, Religare Broking said. Weekly value loss at several of the largest names, the index declines and the crude and geopolitical pressure Religare flagged show that large-cap prices are not locked to a single short-term direction.[2]
REIT dividend relief arrives with a higher surcharge
The taxation bill passed by the Lok Sabha lets the special purpose vehicles under India's real estate and infrastructure investment trusts take the concessional corporate tax regime without making the dividend part of distributions taxable for unitholders, while raising their surcharge to 25 per cent from 10 per cent. Rahul Jain of Nuvama Wealth said distribution per unit could fall slightly in the near term if the vehicles move to the new regime. Kunal Savani of Cyril Amarchand Mangaldas said restoring the dividend exemption removes a structuring friction and adds certainty on returns, while the higher surcharge is a revenue-balancing measure that sponsors must build into distribution economics, particularly now that minimum alternate tax becomes a final non-creditable tax from the 2026-27 financial year, which could push more of the vehicles towards the regime. Industry participants are asking for the increase to be dropped or reduced. Together with the foreign equity return and large-cap value loss, the REIT tax trade-off shows flows, prices and corporate tax rules moving on different layers of India's capital market in the same period.[3], [1], [2]
