As a result, total outflows from Foreign Portfolio Investors (FPIs) in the equity market have reached ₹2.2 lakh crore in 2026, surpassing the ₹1.66 lakh crore withdrawn throughout 2025, according to NSDL data.
FPIs were net sellers for every month of 2026, with the exception of February. They withdrew ₹35,962 crore in January but reversed course in February, investing ₹22,615 crore—the highest monthly inflow seen in 17 months.
However, this positive trend did not last; in March, foreign investors pulled out a staggering ₹1.17 lakh crore. April saw continued selling, resulting in net outflows of ₹60,847 crore, with withdrawals exceeding ₹27,000 crore so far in May.
Himanshu Srivastava, Principal – Manager Research at Morningstar Investment Research India, noted that the recent trend of outflows reflects ongoing uncertainty regarding global growth, heightened geopolitical tensions in critical regions, and volatility in crude oil prices, which continues to impact risk appetite for emerging markets, India included.
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He further highlighted that a stronger US dollar and rising US bond yields have been significant factors driving this selling behavior, as the higher returns in developed markets enhance the appeal of safer assets, encouraging a more defensive approach among investors.
Srivastava added that concerns about the trajectory of global inflation and uncertainty regarding the timing and pace of future interest rate cuts by major central banks are influencing capital allocation decisions worldwide.
Geojit Investments Chief Investment Strategist V K Vijayakumar indicated that continued FPI selling, coupled with a widening current account deficit, is putting pressure on the rupee.
“At the start of the year, the rupee was valued at 90 against the US dollar. By May 15, it had crossed the 96-mark to reach 96.14,” he remarked.
Vijayakumar cautioned that the rupee could depreciate further if FPI outflows continue and crude oil prices stay high. He also mentioned that the ongoing influx of capital into AI-focused companies globally has diverted funds from markets like India, which are perceived to be lagging in the AI arena.
“This trend might reverse once the AI trade, which seems to be in bubble territory, eventually cools down,” he concluded.
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