Winning Bizness Desk
Mumbai. Foreign investors continue to pull money out of the Indian stock market, keeping pressure on Dalal Street amid rising global uncertainty. Foreign Portfolio Investors (FPIs) have withdrawn ₹14,231 crore from Indian equities so far in May, according to NSDL data. The selling trend has remained strong throughout 2026, with total outflows this year crossing ₹2 lakh crore already. Market experts believe concerns around inflation, global interest rates, geopolitical tensions and weakening currencies are making foreign investors cautious about emerging markets like India.
Selling pressure stronger than last year
The scale of foreign selling in 2026 has already crossed the total withdrawals recorded in the entire previous year. In 2025, FPIs had pulled out around ₹1.66 lakh crore from Indian markets. This year, however, the outflow figure has already crossed ₹2 lakh crore within just a few months, showing sustained pressure on equities.
Analysts say foreign investors are moving cautiously as global financial markets remain volatile. Rising uncertainty in major economies and fears of slower growth have forced investors to reduce exposure in riskier markets.
Key numbers showing market trend:
- ₹14,231 crore withdrawn in May so far
- More than ₹2 lakh crore sold in 2026 till date
- Total outflow in entire 2025 stood at ₹1.66 lakh crore
- March saw the highest-ever monthly withdrawal
February remained the only positive month
Foreign investors largely remained negative on Indian equities this year, except for February. In January, FPIs sold shares worth ₹35,962 crore. February, however, brought temporary relief as investors pumped ₹22,615 crore into the market, marking the highest monthly investment in the last 17 months.
But the recovery did not last long.
March witnessed a dramatic reversal, with record selling of nearly ₹1.17 lakh crore. The pressure continued in April as well, when foreign investors pulled out another ₹60,847 crore from the market.
This sharp movement has kept benchmark indices under pressure and increased volatility in both large-cap and mid-cap stocks.
Inflation and rate worries driving exits
Market experts say global inflation concerns and uncertainty over interest rate cuts remain the biggest reasons behind the continued withdrawals. Rising crude oil prices and tensions in the Middle East have added to fears of inflation staying elevated for longer.
According to Himanshu Srivastava, Principal Manager Research at Morningstar Investment Research India, investors are now reducing expectations of quick rate cuts by central banks. Instead, they are moving towards safer debt instruments in developed economies.
Major reasons behind FPI selling:
- Rising global inflation concerns
- Delay in expected interest rate cuts
- Geopolitical tensions in the Middle East
- Higher crude oil prices globally
- Shift towards safer developed-market assets
Weak rupee adding to investor concerns
The weakening and volatile Indian rupee has also become a major concern for foreign investors. Since overseas investors invest in rupees but calculate returns in dollars, any fall in the Indian currency reduces their actual gains when converted back into dollars.
VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said concerns over India’s earnings growth and rupee weakness have significantly contributed to rising outflows this year.
Despite the broader selling trend, foreign investors have not completely exited the Indian market. They continue to show interest in sectors such as power, construction and capital goods. Select mid-cap and small-cap companies with strong earnings growth are also attracting buying interest.
However, global investors are increasingly shifting focus towards markets like South Korea and Taiwan, where artificial intelligence-driven growth is expected to deliver stronger returns in coming years.
Understanding FPI and dollar returns
Foreign Portfolio Investment, or FPI, refers to investments made by foreign individuals or institutions in another country’s stock market, bonds or mutual funds. These investors can quickly move money in or out depending on market conditions and expected returns.
Dollar return is the actual profit earned by foreign investors after converting Indian rupee earnings back into US dollars. If the rupee weakens against the dollar, investors receive lower returns despite gains in the Indian market. This currency impact often influences foreign investment decisions during periods of global uncertainty.
