Foreign investors continued to pare their exposure to Indian equities, withdrawing ₹14,231 crore so far this month driven by persistent global macroeconomic uncertainties.

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.

FPIs were net sellers in all months of 2026, except February. They withdrew ₹35,962 crore in January before turning net buyers in February, when they invested ₹22,615 crore, the highest monthly inflow in 17 months.

However, the trend reversed in March, when foreign investors pulled out a record ₹1.17 lakh crore. The selling continued in April with net outflow of ₹60,847 crore and extended into May with withdrawal of ₹14,231 crore so far.

“The selling was largely driven by persistent global macroeconomic uncertainties, particularly concerns around inflation, interest rates and geopolitical risks, which continued to weigh on sentiment toward emerging markets,” said Himanshu Srivastava, Principal – Manager Research at Morningstar Investment Research India.

He said uncertainty over the global interest rate trajectory remained a key factor influencing flows. Elevated crude oil prices and lingering geopolitical tensions, especially in West Asia, kept inflation concerns alive globally, prompting investors to reassess expectations of near-term rate cuts by major central banks.

As a result, global bond yields remained relatively firm, enhancing the attractiveness of developed-market fixed income assets and reducing risk appetite for emerging market equities, he added.

Mr. Srivastava also noted that the Indian rupee remained under intermittent pressure, impacting dollar-adjusted returns for foreign investors.

V.K. Vijayakumar, Chief Investment Strategist at Geojit Investments, said that despite the overall selling, FPIs had been selectively investing in sectors such as power, construction and capital goods.

Another major trend was their increasing preference for mid-cap and select small-cap stocks with strong growth potential and healthy earnings performance, he said.

According to Mr. Vijayakumar, currency depreciation and concerns over earnings growth in India had been key factors driving FPI outflows this year.

He added that stronger earnings growth expected in markets such as South Korea and Taiwan, supported by the artificial intelligence boom, was attracting FPI flows to these markets.

Foreign portfolio investors (FPIs) infused ₹22,615 crore into Indian equities, marking the highest monthly inflow in 17 months, driven by the interim India-U.S. trade deal, correction in domestic market valuations and robust third-quarter corporate earnings.

The latest buying follows three consecutive months of heavy selling. FPIs pulled out ₹35,962 crore in January, ₹22,611 crore in December and ₹3,765 crore in November, according to data from the depositories.

Overall, FPIs have withdrawn a net ₹1.66 lakh crore ($18.9 billion) from Indian equities in 2025, making it one of the worst periods for foreign flows. The outflows were triggered by volatile currency movements, global trade tensions, concerns over potential US tariffs and stretched equity valuations.

According to the data, FPIs invested ₹22,615 crore in February. This was the highest monthly inflow since September 2024, when they had invested ₹57,724 crore.

The inflow was driven by secondary market buying, signalling renewed foreign confidence post-2025 outflows, said Vinit Bolinjkar, Head of Research at Ventura.

Javed Khan, Senior Fundamental Analyst at Angel One Ltd, said three key catalysts supported the inflow. These included India-U.S. trade agreements and corrections in India’s market valuation. Additionally, Q3 FY26 earnings grew 14.7%, suggesting confidence in the growth narrative.

Echoing similar views, Varun Gupta, CEO of Groww Mutual Fund, attributed the renewed inflows to improving earnings momentum, moderation in valuations from peak levels and early signs of easing trade uncertainty, with India concluding multiple FTAs, including those with the EU and UK.

Sectorally, FPIs were aggressive buyers in financials and capital goods, while continuing to pare exposure to the IT sector. The segment saw outflows of ₹10,956 crore amid concerns over AI-led disruption.

“FPIs had sold heavily in IT stocks due to the Anthropic shock and continued weakness in the segment. However, they turned buyers in financial services and capital goods,” said V.K. Vijayakumar, Chief Investment Strategist at Geojit Investments.

Looking ahead, Mr. Khan said March flows are expected to remain positive. Q4 earnings will determine whether 15% earnings growth in FY27 is achievable, while rupee stability below ₹91 to the dollar provides comfort on returns.

Vijayakumar said FPIs are likely to adopt a wait-and-watch approach before increasing exposure to emerging markets. However, improving GDP growth prospects and a healthy corporate earnings outlook for FY27 bode well for medium-term flows.

Meanwhile, the ongoing conflict in the Middle East has triggered a risk-on sentiment in financial markets. Its impact on crude prices and currency movements remains a key monitorable, he added.

Foreign portfolio investors have started 2026 on a cautious note, extending their selling streak from last year by withdrawing ₹7,608 crore ($846 million) from Indian equities in the first two trading sessions of January.

The withdrawal of funds followed the largest outflow of ₹1.66 lakh crore ($18.9 billion) recorded in 2025, triggered by volatile currency movements, global trade tensions and concerns over potential U.S. tariffs, and stretched market valuations.

This sustained selling pressure by foreign portfolio investors (FPIs) has significantly contributed to the nearly 5% depreciation of the rupee against the dollar during 2025.

However, market experts believe the tide could turn in 2026.

V.K. Vijayakumar, Chief Investment Strategist at Geojit Investments, said the year is likely to witness a shift in FPI strategy, as improving domestic fundamentals may start attracting net foreign inflows.

A robust GDP growth and the prospects of a recovery in corporate earnings bode well for positive FPI flows in the coming months, he added.

Echoing similar views, Vaqarjaved Khan, Senior Fundamental Analyst at Angel One, said normalisation in India-U.S. trade relations, a benign global interest rate environment and stability in the USD-INR pair could create a favourable backdrop for foreign investors.

He noted that equity valuations have become relatively comforting compared to last year, which could further support a revival in inflows.

Despite these positive expectations, FPIs have begun 2026 on a cautious note, and according to data from NSDL, they pulled out nearly ₹7,608 crore from Indian equities between January 1 and 2.

This trend is not unusual, as foreign investors have historically remained guarded in January, having withdrawn funds in eight out of the past ten years, Mr. Khan said.

Consequently, FPI flows are likely to remain highly sensitive to global cues and macroeconomic developments. While high valuations were a key concern over the past year, that pressure appears to have eased for now, offering some room for optimism going ahead, he added.

Foreign portfolio investors have started 2026 on a cautious note, extending their selling streak from last year by withdrawing ₹7,608 crore ($846 million) from Indian equities in the first two trading sessions of January.

The withdrawal of funds followed the largest outflow of ₹1.66 lakh crore ($18.9 billion) recorded in 2025, triggered by volatile currency movements, global trade tensions and concerns over potential U.S. tariffs, and stretched market valuations.

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This sustained selling pressure by foreign portfolio investors (FPIs) has significantly contributed to the nearly 5% depreciation of the rupee against the dollar during 2025.

However, market experts believe the tide could turn in 2026.

V.K. Vijayakumar, Chief Investment Strategist at Geojit Investments, said the year is likely to witness a shift in FPI strategy, as improving domestic fundamentals may start attracting net foreign inflows.

A robust GDP growth and the prospects of a recovery in corporate earnings bode well for positive FPI flows in the coming months, he added.

Echoing similar views, Vaqarjaved Khan, Senior Fundamental Analyst at Angel One, said normalisation in India-U.S. trade relations, a benign global interest rate environment and stability in the USD-INR pair could create a favourable backdrop for foreign investors.

He noted that equity valuations have become relatively comforting compared to last year, which could further support a revival in inflows.

Despite these positive expectations, FPIs have begun 2026 on a cautious note, and according to data from NSDL, they pulled out nearly ₹7,608 crore from Indian equities between January 1 and 2.

This trend is not unusual, as foreign investors have historically remained guarded in January, having withdrawn funds in eight out of the past ten years, Mr. Khan said.

Consequently, FPI flows are likely to remain highly sensitive to global cues and macroeconomic developments. While high valuations were a key concern over the past year, that pressure appears to have eased for now, offering some room for optimism going ahead, he added.

Foreign investors have pulled out ₹11,820 crore ($1.3 billion) from Indian equities in the first week of December, primarily driven by the sharp depreciation of the rupee.

This sharp withdrawal follows a net outflow of ₹3,765 crore in November, further pressuring markets.

These outflows come after a brief pause in October, when Foreign Portfolio Investors (FPIs) invested ₹14,610 crore, breaking a three-month streak of massive withdrawals — ₹23,885 crore in September, ₹34,990 crore in August and ₹17,700 crore in July.

According to NSDL (National Securities Depository Limited) data, FPIs withdrew a net amount of ₹11,820 crore from Indian equities in the first week of December. This takes the total outflow for 2025 to ₹1.55 lakh crore ($17.7 billion).

Analysts attribute the renewed selling primarily to currency concerns.

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The rupee has depreciated nearly 5% this year, prompting FPIs to pull out during such periods, said V.K. Vijayakumar, Chief Investment Strategist at Geojit Investments.

Adding to this, year-end portfolio repositioning by global investors, a typical December trend before the holiday season, has also intensified selling, noted Vaqarjaved Khan, Senior Fundamental Analyst at Angel One.

“Delays in finalising the India-U.S. trade deal have further dampened global sentiment,” Mr. Khan said.

However, despite the FPI exodus, the impact on markets has been cushioned by strong domestic participation. Domestic Institutional Investors (DIIs) bought equities worth ₹19,783 crore during the same period, completely offsetting the foreign selloff, Mr. Vijayakumar said.

DII confidence has been supported by India’s robust GDP numbers and expectations of an improvement in corporate earnings ahead.

The sentiment received an additional boost after the RBI’s 25 bps rate cut on December 5, when FPI flows turned positive for the day at ₹642 crore.

This shift was significant, considering FPIs had sold nearly ₹13,000 crore by December 4.

“The RBI not only reduced rates but also raised its FY26 growth guidance to 7.3%, while cutting its CPI forecast to 2%. A strong growth environment augurs well for Indian equities,” Khan said.

“Looking ahead, global liquidity may get another lift. The CME Fed Watch Tool indicates that the Federal Open Market Committee [FOMC] is expected to cut rates by 25 bps next week, a move that typically benefits risk assets worldwide,” he said.

“India could be a key beneficiary, though the absence of a concluded India-U.S. trade deal remains a risk factor”, he added.

Meanwhile, in the debt market, FPIs invested ₹250 crore under the general limit while withdrawing ₹69 crore through the voluntary retention route during the same period.

After a brief pause in October, Foreign Portfolio Investors (FPI) resumed selling, pulling out a net ₹3,765 crore from Indian equities in November, driven by global risk-off sentiment, volatility in global tech stocks, and selective preference for primary markets over secondary markets.

This dip in November came right after a net inflow of ₹14,610 crore in October, an uptick that had broken a three-month streak of withdrawals — ₹23,885 crore in September, ₹34,990 crore in August, and ₹17,700 crore in July, according to data from the National Securities and Depositories Ltd. (NSDL).

The flow trend through November was shaped by a combination of global and domestic factors.

“On the global front, uncertainty around the U.S. Federal Reserve’s rate-cut trajectory, a firm U.S. dollar, and weak risk appetite across emerging markets kept foreign investors cautious. Persistent geopolitical tensions and volatile crude prices further reinforced the risk-off tone,” said Himanshu Srivastava, Principal, Manager Research, Morningstar Investment Research India.

Domestically, this cautiousness was compounded by pockets of stretched valuations and subdued industrial indicators, which tempered investor conviction despite India’s relatively stable macroeconomic backdrop, he added.

Reflecting this sentiment, Vaqarjaved Khan, Senior Fundamental Analyst at Angel One, noted that the outflows in November were primarily driven by global risk aversion and volatility in tech stocks. IT services, consumer services, and healthcare were among the sectors that faced the sharpest impact.

However, not all indicators point toward a sustained bearish trend. V. K. Vijayakumar, Chief Investment Strategist at Geojit Investments, believes there is still no clear evidence of a trend reversal in FPI flows. He noted that FPIs were buyers on some days and sellers on others, an indication that flows may shift as conditions evolve.

“The recent rally, with both Nifty and Sensex hitting new records on November 27 after a fourteen-month wait, along with improved Q2 corporate earnings and expectations of further growth in Q3 and Q4, has lifted market sentiment,” Mr. Vijayakumar added.

Looking ahead, Angel One’s Mr. Khan said that FPI activity in December will likely depend on the U.S. Federal Reserve’s rate-cut signals and progress on the trade pact between India and the U.S.

So far in 2025, FPIs have withdrawn over ₹1.43 lakh crore from Indian equities. Meanwhile, in the debt market, FPIs invested ₹8,114 crore under the general limit while withdrawing ₹5,053 crore through the voluntary retention route during the same period.

Foreign investors pulled out ₹12,257 crore ($1.4 billion) from Indian equities in the first week of September, weighed down by a stronger dollar, U.S. tariff concerns, and persistent geopolitical tensions.

This came following a net outflow of ₹34,990 crore in August and ₹17,700 crore in July.

With this, the total outflow by Foreign Portfolio Investors (FPIs) in equities reached ₹1.43 lakh crore so far in 2025, data with the depositories showed.

In the coming week, FPI flows are expected to be driven by U.S. Fed commentary, U.S. labour market data, RBI rate cut expectations, and its stance on rupee stability, Vaqarjaved Khan, Senior Fundamental Analyst, Angel One, said.

“While near-term volatility may persist, India’s structural growth story, policy reforms, such as GST rationalisation, and expectations of an earnings revival could bring FPIs back once global uncertainties ease,” Himanshu Srivastava, Associate Director – Manager Research, Morningstar Investment, said.

Market experts believe that a combination of global and domestic factors triggered the latest withdrawals.

“Multiple factors contributed to this risk-off sentiment — a stronger dollar, renewed US tariff threats, and continuing geopolitical tensions added to global uncertainty,” Mr. Srivastava said.

Domestically, slowing corporate earnings momentum and concerns over high valuations — Indian equities continue to trade at a premium to other emerging markets — prompted FPIs to book profits and reduce exposure, he added.

Echoing similar views, Mr. Khan said US tariff tensions, a weak rupee and global risk-off sentiment led to the selloff. The sentiment was cushioned by the rationalisation of GST rates by the government and healthy first quarter GDP data of 7.8%.

V.K. Vijayakumar, Chief Investment Strategist at Geojit Investments, said that sustained massive DII buying is enabling FPIs to encash at high valuations and take the money to cheaper markets, such as China, Hong Kong, and South Korea.

On the other hand, FPIs invested ₹1,978 crore in the debt general limit and withdrew ₹993 crore in the debt voluntary retention route during the period under review.

Foreign investors have pulled out nearly ₹18,000 crore from Indian equities so far this month, weighed down by escalating U.S.-India trade tensions, disappointing first-quarter corporate earnings, and a weakening Indian rupee.

With this, the total outflow by Foreign Portfolio Investors (FPIs) in equities has reached ₹1.13 lakh crore so far in 2025, according to data from the depositories.

Going forward, FPI sentiment is expected to remain “fragile and in risk-off mode,” with tariffs and trade negotiations emerging as key factors to watch out for in the coming week, according to Vaqarjaved Khan, CFA, Senior Fundamental Analyst at Angel One.

The data showed that FPIs withdrew a net sum of ₹17,924 crore from equities in this month (till August 8). Foreign investors had pulled out ₹17,741 crore on a net basis in July. Before that, FPIs invested ₹38,673 crore in the preceding three months from March to June.

The latest outflows were primarily due to escalating U.S.-India trade tensions, disappointing first-quarter corporate earnings and a weakening Indian rupee, Himanshu Srivastava, Associate Director – Manager Research, Morningstar Investment Research India, said.

From August 1, the U.S. imposed a 25% tariff on Indian goods and increased these tariffs by an additional 25% during the current week. This spooked the markets and FPIs, leading to a massive sell-off in Indian equities, Angel One’s Khan said.

Along with tariffs, rising U.S. Treasury yields also led to foreign money moving towards treasuries, he added.

On the other hand, FPIs invested ₹3,432 crore in the debt general limit and put in ₹58 crore in the debt voluntary retention route during the period under review.