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Capital Markets Landscape

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Equity market indices

Indian equities consolidated in August 2026 after recording gains for two consecutive months, with the Nifty 50 declining 1.2% MoM while the Nifty 500 remained broadly unchanged. The broader market, however, continued to perform well, with the Nifty Midcap 50 and Nifty Small Cap indices gaining 2.1% and 3.1%, respectively. This was supported by foreign investors remaining net buyers for the second consecutive month and robust DII purchases. Resilient domestic earnings and economic activity also supported sentiment, with mid- and small-cap indices reaching record highs during the month. In contrast, global equities saw a broad-based rally, supported by strong corporate earnings and continued strength in technology, materials and energy. The Shanghai Composite, FTSE/JSE and Nikkei 225 gained 4.0%, 5.3% and 3.0%, respectively, while the S&P 500 and Dow Jones rose 2.6% and 1.3%.

Movement in global equity indices during the last two years (June’2023 = 100)

Source: LSEG Workspace, NSE EPR

Investor flows in August 2026 remained supportive of Indian equities, with FPI inflows strengthening to US$3.1 bn from US$2.1 bn in July. This not only extended the buying streak to a second consecutive month but also marked the highest monthly inflows since Sep’24. The recovery was supported by improving corporate earnings and resilient economic activity. DII inflows also increased significantly to US$6.1 bn from US$3.7 bn, reflected in continued mutual fund inflows, with equity-oriented schemes recording their highest inflow in four months. Individual investors, however, remained marginal net sellers for the second month in a row. For CY2026, cumulative DII and individual investor inflows reached US$65.4 bn, more than offsetting cumulative FPI outflows of US$24.1 bn.

Monthly Trends in equity fund flows across FPIs, DIIs and individual investors

Source: NSDL, LSEG Workspace and NSE EPR

Total fund mobilisation in the first four months of FY27 stood at US$52.2 billion, with July alone accounting for US$20.1 billion. July fundraising was led by equity issuances at US$11.9 billion, while debt issuances contributed US$8.2 billion.

Trends in absolute fund mobilisation across equity, debt and REITs-InvITs in India

Source: SEBI, LSEG Workspace, NSE EPR

Notes: 1) Latest data available till July 2026

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In August 2026, mutual funds recorded net inflows of US$4.3 billion, moderating sharply from the US$24.6 billion inflow recorded in July. Average AUM of the MF industry rose to US$925.3 billion, up from US$901 billion in July, surpassing the previous peak of US$919 billion recorded in February 2026. Despite the moderation in net flows, the continued rise in AUM and sustained SIP inflows point to steady investor participation in mutual funds.

Trends in net fund flows and average assets under management of mutual funds

Source: AMFI, CMIE Economic Outlook, LSEG Workspace, NSE EPR

Total demat accounts in India rose to 237.6 million, while MF folios increased to 283.5 million as of August 2026, reflecting the continued expansion of the retail investor base and sustained participation in financial markets.

Trends in number of demat accounts and MF folios

Source: CMIE Economic Outlook, NSE EPR

Trends in number of demat accounts and MF folios

Source: MSCI Index Factsheet