mumbai, Aug. 26 -- Foreign portfolio investors (FPIs) are returning to India, but the buying is far from a broad vote of confidence. FPIs invested over Rs.25,000 crore in Indian stocks between August 1 and 24, the strongest monthly inflow since September 2024, after bringing Rs.20,200 crore in July. If the trend holds, FPIs will have bought Indian equities for two consecutive months for the first time this year-a sharp reversal from the record monthly outflow of nearly Rs.1.2 trillion in March. Yet, global fund managers remain wary, as India became Asia's least-preferred equity market in Bank of America's August fund manager survey. The disconnect signals FPIs are rebuilding exposure to parts of the market where recent corrections have improved valuations and earnings visibility, rather than making a broad bet on India. Their choices reflect uncertainty over global growth, bond-market returns and the AI trade even as domestic earnings hold up. Financial services drew the most FPI money in the first fortnight of August, attracting Rs.6,535 crore after an outflow of Rs.2,669 crore in the previous fortnight, per National Securities Depository Ltd data. Automobiles followed with Rs.4,405 crore, nearly twice the inflow in the second half of July, while consumer services attracted Rs.3,398 crore, up from Rs.2,840 crore in the previous fortnight. These are sectors foreign investors traditionally favour, and recent corrections have improved their risk-reward equation, said Divam Sharma, cofounder, Green Portfolio PMS. The Nifty Financial Services index trades at 17.3 times 12-month trailing earnings, below its five-year average of 19.5 times. The Nifty Auto index trades at 33.6 times, against an average of 41.8 times, while the Nifty Consumption index is at 42.3 times, below its 47.2-times average. The Nifty 50 trades at 21.8 times earnings, below its five-year average of 23.1 times, suggesting the valuation reset is making parts of the market more attractive. The contrast is clearest in the sectors losing foreign money. Capital goods, power and realty saw some of the strongest FPI outflows between August 1 and 15, while telecom led the decline with an outflow of Rs.3,322 crore. Telecom, power and capital goods have also seen consistent outflows for nearly two months, signalling a shift away from overvalued and rate-sensitive businesses towards companies with greater earnings and demand visibility. The prospect of persistently higher borrowing costs is a key driver of this sectoral rotation, said Harsh Gupta Madhusudan, fund manager of Ionic Asset's PIPE Fund. On August 18, the 30-year US Treasury yield hit 5.34%, the highest since 2007, as investors dumped US bonds after its debt breached $40 trillion....