With this, the total outflow of Foreign Portfolio Investors (FPIs) from the equity market has crossed ₹2 lakh crore in 2026, which is higher than the ₹1.66 lakh crore pulled out during the entire 2025, according to data with the NSDL.
| Photo Credit: Reuters

The outflow makes it the third in the first four months of the calendar year. There was a net inflow of ₹22,615 crore in February 2026.
| Photo Credit: V. Sudershan

Representational file image.
| Photo Credit: M. Srinath

Representational image only. File
| Photo Credit: Special arrangement

Foreign investors pulled out ₹21,612 crore ($2.56 billion) from the Indian equity market in November, mainly owing to the rising U.S. bond yields, strengthening dollar and expectation of a slowdown in the domestic economy.

While the sell-off continues, the quantum of net outflow significantly reduced compared to October, when FPIs recorded a massive withdrawal of ₹94,017 crore ($11.2 billion). With the latest pull out, Foreign Portfolio Investors (FPIs) have experienced total net outflow of ₹15,019 crore in 2024 so far.

RBI announces rules to reclassify FPI investment as FDI once it crosses 10% holding in Indian firms

“Looking ahead, the flow of foreign investments into Indian equity markets will hinge on several key factors. These include the policies implemented under Donald Trump’s Presidency, the prevailing inflation and interest rate environment, and the evolving geopolitical landscape,” Himanshu Srivastava, Associate Director Manager Research, Morningstar Investment Research India, said.

“Additionally, the third-quarter earnings performance of Indian companies and the country’s progress on the economic growth front will play a crucial role in shaping investor sentiment and influencing foreign inflows,” he added.

According to the data, FPIs recorded a net outflow of ₹21,612 crore in November. This came following a net withdrawal of ₹94,017 crore in October, which was the worst monthly outflow.

FPIs withdraw ₹85,790 crore from Indian equities in October on attractive Chinese market valuations

However, in September, foreign investors made a nine-month high investment of ₹57,724 crore. Market analysts attributed the latest outflow to the rising U.S. bond yields, strengthening dollar and expectation of a slowdown in the domestic economy.

Overall, November experienced net outflow but FPIs staged a notable reversal at the beginning of the week ended November 29, due to decisive victory of the BJP-led Mahayuti alliance in the Maharashtra Assembly elections. “The resulting political stability appears to have strengthened investor confidence,” Mr. Srivastava said.

Another factor that contributed to this buying activity is the rebalancing of MSCI’s key indices, which added few select Indian stocks in its index. “Further, a glimmer of hope for ceasefire between Israel and Lebanon may have also positively influenced market sentiment, particularly from a geopolitical standpoint,” he added.

Foreign Portfolio Investment in Indian equities drop 11% to $542 bn in January-March quarter

“A perplexing feature of the recent FPI activity is their highly erratic nature. For instance, during November 23-25, FPIs were buyers, however, in the next two days they again turned massive sellers having sold equity worth ₹16,139 crore,” V.K. Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said.

On the other hand, FPIs invested ₹1,217 crore in the debt general limit and ₹3,034 crore in the debt Voluntary Retention Route (VRR) during the period under review. So far this year, FPIs have invested ₹1.07 lakh crore in the debt market.

Whenever the U.S. 10-year bond yields rose above 4.5%, FPIs sold in emerging markets like India and moved money to bonds. 
| Photo Credit: S.R. Raghunathan

Foreign investors pulled out a massive ₹25,586 crore from Indian equities in May due to uncertainty surrounding the outcome of general election and outperformance of Chinese markets.

This was way higher than a net outflow of over ₹8,700 crore in April on concerns over a tweak in India’s tax treaty with Mauritius and a sustained rise in U.S. bond yields.

Before that, FPIs made a net investment of ₹35,098 crore in March and ₹1,539 crore in February, while they took out ₹25,743 crore in January, data with the depositories showed.

Going ahead, election results, which will be out on June 4, could determine FPIs flows into Indian equities in the near future.

In the medium term, U.S. interest rates will exert more influence on FPI flows, Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said.

According to the data, Foreign Portfolio Investors (FPIs) made a net withdrawal of ₹25,586 crore from equities in May.

The relatively high valuations and weak earnings, particularly in the financial and IT sectors where FPIs have a high allocation, along with political uncertainties such as ambiguity around the outcome of elections, global risk-off sentiment, and the appeal of Chinese markets, have led to FPI selling, Vipul Bhowar, Director of Listed Investments at Waterfield Advisors, said.

“The main trigger for the FPI selling has been the outperformance of the Chinese stocks. The Hang Seng index boomed 8% in the first half of May, triggering selling in India and buying in Chinese stocks,” Mr. Vijayakumar said.

Another reason was the spike in U.S. bond yields. Whenever the U.S. 10-year bond yields rose above 4.5%, FPIs sold in emerging markets like India and moved money to bonds. These two factors triggered the selling in equity in India, he added.

Further, robust GDP growth, manageable inflation and political stability can create a positive outlook for the Indian economy, marking a turnaround from their net selling in May.

GDP growth numbers released on Friday painted a very optimistic picture. Q4FY24 GDP growth came in at 7.8% surpassing the 6.7% expectation, while the full-year FY24 growth stood at 8.2%.

Additionally, the record dividend of ₹2.1 lakh crore from the RBI has provided further fiscal room for the government to continue focus on infra spending.

“These factors suggest that monthly FPI inflows could exceed a sustained ₹30,000 crore (in this month) if the current government remains in power,” Kislay Upadhyay, smallcase manager & Founder of FidelFolio, said.

Shailesh Saraf, smallcase Manager and CEO of Valuestocks, said: “We are extremely bullish on the Indian markets as we are expecting the ruling party to come to power once again. Also if we look at the corporate profits for March 2024, there has been a 10% Year-on-Year increase…which bodes well for the markets”.

On the other hand, FPIs invested ₹8,761 crore in debt and ₹4,283 crore through debt-VRR (Voluntary Retention Route). Before this, foreign investors put in ₹13,602 crore in March, ₹22,419 crore in February, ₹19,836 crore in January.

This inflow was driven by the upcoming inclusion of Indian government bonds in the JP Morgan Index.

Market experts believe that long-term outlook for FPI flows into Indian debt is positive due to India’s inclusion in global bond indices.

However, near-term flows are being impacted by global macroeconomic uncertainty and volatility. Overall, FPIs withdrew a net amount of ₹23,364 crore from equities in 2024 so far. They however invested ₹53,669 crore in debt market.

Image for representation
| Photo Credit: Reuters

The Reserve Bank of India (RBI) has decided to facilitate wider non-resident participation in the Sovereign Green Bonds by permitting eligible foreign investors in the International Financial Services Centre (IFSC) to invest in such bonds.

“A scheme for investment and trading in SGrBs by eligible foreign investors in IFSC is being notified separately in consultation with the Government and the IFSC Authority,” Governor Shaktikanta Das announced as additional measures soon after the bi-monthly monetary policy committee meeting on April 5, 2024.

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Based on an announcement in the Union Budget for FY 2022-23, the Government of India had issued Sovereign Green Bonds in January 2023. The SGrBs were also issued as part of the Government borrowing calendar in FY 2023-24.

At present, foreign portfolio investors (FPIs) registered with SEBI are permitted to invest in SGrBs under the different routes available for investment by FPIs in government securities.