Foreign investors remained sellers in Indian equities, dumping more than ₹62,853 crore of shares in the first fortnight of June amid heightened geopolitical tensions, concerns over global economic growth and persistent weakness in the rupee.

With the latest outflows, total withdrawals by Foreign Portfolio Investors (FPIs) from Indian equities have surged to ₹2.87 lakh crore so far in 2026, surpassing the ₹1.66 lakh crore pulled out during the entire calendar year 2025, according to data from the National Securities Depository Ltd (NSDL).

Pabitro Mukherjee, deputy vice president-research at Bajaj Broking, said FPI flows in the coming week will depend on developments in the U.S.-Iran peace talks, the U.S. Federal Open Market Committee’s policy decision, the Bank of Japan’s rate decision and commentary from major central banks.

According to NSDL data, FPIs have remained net sellers in every month of 2026 except February. They withdrew ₹35,962 crore in January before turning net buyers in February, investing ₹22,615 crore, marking the highest monthly inflow in 17 months.

The trend, however, reversed sharply in March, when foreign investors pulled out a record ₹1.17 lakh crore. The selling pressure continued in April with net outflows of ₹60,847 crore and in May with withdrawals of ₹32,963 crore. In June, FPIs have already withdrawn ₹62,853 crore during the first two weeks of the month.

Himanshu Srivastava, principal, manager research, Morningstar Investment Research India, said investors continue to navigate an environment marked by elevated uncertainty around the interest-rate trajectory of major central banks, geopolitical developments and concerns over global growth.

“In such phases, emerging markets often witness tactical de-risking as investors seek safety and rebalance portfolios towards developed markets and defensive assets,” he said.

Mr. Srivastava added that India’s relatively rich valuations compared with several emerging-market peers may also have prompted foreign investors to adopt a more selective approach towards allocations.

Market participants said the persistent depreciation of the rupee has emerged as another key factor behind the sustained outflows.

The Indian currency has weakened nearly 6% so far in 2026 and around 10% over the past year, falling from the mid-80s level to about 95 against the U.S. dollar despite efforts by the Reserve Bank of India (RBI) to stabilise the currency.

However, the pace of FPIs outflows moderated significantly in the latter half of last week, indicating that while risk aversion remained elevated, the intensity of foreign selling eased gradually.

On Friday, FPIs sold equities worth only ₹1,082 crore in the cash market.

V.K. Vijayakumar, Chief Investment Strategist at Geojit Investments, said recent geopolitical developments and expectations of a peace agreement between the U.S. and Iran have resulted in a sharp correction in Brent crude prices to below $87 per barrel.

“For a large oil importer like India, this is a significant positive. India is facing a balance of payments deficit of about $60 billion in FY27,” he said.

Given the importance of foreign portfolio flows in financing the current account deficit and supporting the balance of payments, policymakers have announced a series of measures aimed at attracting overseas capital.

These include the RBI absorbing hedging costs on FCNR deposits mobilised by commercial banks, expanding the forex swap window, increasing access to government bonds through the Fully Accessible Route (FAR), and raising investment limits for non-resident Indians and overseas citizens of India in domestic equities.

In contrast to the equity outflows, FPIs invested more than ₹13,200 crore in debt securities through the FAR route during the first fortnight of June, taking total investments through this channel to nearly ₹28,000 crore so far this year.

Published – June 14, 2026 12:07 pm IST

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

FPIs pumped ₹3.4 lakh crore into the capital market, according to data available with the depositories. File
| Photo Credit: Reuters

Foreign investors made a strong return by injecting more than ₹2 lakh crore into Indian equities in 2023-24, driven by optimism surrounding the country’s robust economic fundamentals amidst a challenging global environment.

Looking forward to 2025, Bharat Dhawan, Managing Partner at Mazars in India, said that the outlook is cautiously optimistic and anticipates sustained Foreign Portfolio Investors (FPI) inflows supported by progressive policy reforms, economic stability, and attractive investment avenues. “However, we remain mindful of global geopolitical influences that may introduce intermittent volatility, emphasising the importance of strategic planning and agility in navigating market fluctuations,” he added.

The outlook for FY25 from an FPI perspective continues to remain strong,  Naveen KR, smallcase Manager and Senior Director at Windmill Capital, said. In the current fiscal 2023-24, FPIs have made a net investment of around ₹2.08 lakh crore in the Indian equity markets and ₹1.2 lakh crore in the debt market. Collectively, they pumped ₹3.4 lakh crore into the capital market, as per data available with the depositories.

The dazzling resurgence came following an outflow from equities in the preceding two financial years. In 2022-23, Indian equities witnessed a net outflow of ₹37,632 crore by FPIs on aggressive rate hikes by the central banks globally. Before this, they pulled out a massive ₹1.4 lakh crore. However, in 2020-2021, FPIs made a record investment of ₹2.74 lakh crore.

The flows from foreign investors were largely driven by factors such as inflation and interest rate scenarios in developed markets such as the US and UK, currency movement, the trajectory of crude oil prices, geopolitical scenario, and the health of the domestic economy among others,  Himanshu Srivastava, Associate Director – Manager Research, Morningstar Investment Research India, said. “Investors increasingly favoured Indian equities, drawn by the market’s demonstrated resilience during uncertain periods. Compared to other similar markets, India’s economy stood out as more robust and stable amidst global economic turbulence, further attracting foreign investment,” he said.

FPIs increase investments in debt market

After withdrawing funds in the preceding fiscal, FPIs poured a staggering ₹1.2 lakh crore into the debt market too, marking a noteworthy shift in their capital flow. They took out funds to the tune of ₹8,938 crore in FY23.

FPIs’ debt investments have been extremely robust this fiscal due to attractive yields on Indian sovereign debt relative to the US treasury. This has been supported by strong macros in the form of the robust growth outlook for the Indian economy, stable inflation and a stable currency, and the stated objective of the Government to improve its fiscal deficit, Nitin Raheja, Executive Director, Julius Baer India, said. Additionally, the upcoming inclusion of Indian bonds in JP Morgan’s index has led to an inflow in advance into the Indian debt markets. Further, the expected global tapering in policy rates should make bond yields in emerging economies look even more attractive to investors making this trend of inflows into Indian debt more sustainable, he added.

Overall, FPIs started the year 2023-24 on a positive note in April and incessantly purchased equities till August on the resilience of the Indian economy amid an uncertain global macro backdrop. During these five months, they brought in ₹1.62 lakh crore.  After this, FPIs turned net sellers in September and the bearish stance continued in October, with an outflow of over ₹39,000 crore in these two months. However, FPIs became net investors in November and the optimism persisted in December too, when they purchased equity to the tune of Rs 66,135 crore.  Again, they turned sellers and pulled out Rs 25,743 crore in January.

This could be on account of China opening up after the lockdown. This led FPIs to pull out their investments from other emerging markets like India and divert them toward China. However, China struggled to sustain investor interest. Moreover, the fiscal year ended on a positive note as FPIs bought shares worth over Rs 35,000 crore in March.