Foreign portfolio investors’ sentimental shift towards healthcare stocks is underway on the Street, as they have emerged net buyers in the sector for the last two-and-a-half months ended September 15, 2026, after a prolonged selloff.
In the first half of September, healthcare saw FPI inflows of ₹2,114 crore, the highest among all sectors, adding to the ₹5,931 crore and ₹7,755 crore buying seen in August and July, respectively. Together, the inflows are at ₹15,800 crore.
This buying follows a massive ₹40,160-crore outflow seen between April 2025 and June 2026. During these 14 months, May 2026 was the only month when flows turned positive but remained minuscule at ₹183 crore, shows analysis by Prime Database.
FPI inflows into healthcare after a long outflow phase reflect the sector’s defensive appeal, resilient domestic demand, steady pharma earnings, and relative outperformance versus more volatile sectors, noted Santosh Meena, head of research at Swastika Investmart. CHECK Stock Market LIVE Updates The steady flows in recent months have driven the Nifty Healthcare index 1 per cent higher in from July 1, 2026, till September 15, 2026, and 15 per cent on a year-to-date basis. Even during the phase of sustained outflows, the index remained in favour and gained 18 per cent between April 2025 and June 2026, shows ACE Equity data, with only three stocks from the sector turning losers while the remaining 17 remained higher and gained up to 147 per cent.
Sunny Agrawal, head of fundamental research at SBI Securities, said the sector is benefiting from a relatively resilient domestic demand environment, improving growth prospects across pharmaceuticals, hospitals and diagnostics, and the emergence of new growth vectors such as CDMO and GLP-1.
After a prolonged period of underperformance and outflows, these improving fundamentals have also made the sector more relevant from a portfolio-allocation perspective, he added.
What to expect from healthcare sector going ahead?
Despite the steady gains seen this year, analysts believe the healthcare segment will continue to demand attention from investors, led by insurance penetration and formalisation of care.
Although future returns, Meena said, will depend more on earnings delivery than further re-rating.
SBI Securities’ Agrawal also remains constructive on healthcare, as the investment thesis is increasingly being supported by structural earnings growth rather than being driven purely by a re-rating.
“We see multiple independent growth engines across the sector—domestic pharmaceuticals, US generics, CDMO, GLP-1-related opportunities, hospitals and diagnostics. This diversification provides relatively good visibility on medium- to long-term growth,” he noted.
That said, after the recent performance, stock selection becomes increasingly important, believe analysts.
Vishal Manchanda, senior VP – institutional research at Systematix Group said that healthcare structurally is on a strong grounds, while there seems to be some froth in valuations of certain CDMO and CRAMS names. As a house, his preferred names are Sun Pharma, Cipla and Jubilant Pharmova.
Meena’s top stock picks include Torrent Pharma and Divi’s Laboratories as they look well-placed for continued domestic and specialty and export momentum, while Narayana Hrudayalaya offers scalable hospital growth. He added that Molbio adds a diagnostics innovation angle, but carries higher volatility.
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