Mumbai2 hours ago
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Withdrawal of foreign portfolio investors (FPIs) from the Indian stock market continues in the month of May. Due to global economic concerns, foreign investors have withdrawn more than ₹2 lakh crore from the market so far this year.
According to NSDL data, foreign investors have so far sold ₹14,231 crore in the month of May alone.
More pressure this year than 2025
The total withdrawal so far in the year 2026 is much more than the entire last year. In the year 2025, foreign investors had withdrawn a total of ₹ 1.66 lakh crore from the Indian market.
So far this year, this figure has crossed ₹ 2 lakh crore, which shows the continuous selling pressure on the market.
Purchasing took place only in February, record selling took place in March
This year the attitude of foreign investors has mostly been negative. Shares worth ₹35,962 crore were sold in January. However, February was an exception when investors invested ₹22,615 crore, the highest monthly investment in the last 17 months. But this lead did not last long.
March saw the biggest reversal ever as a record ₹1.17 lakh crore exited the market. After this, withdrawal of ₹ 60,847 crore has been recorded in April also.
Inflation and interest rates became major reasons
According to Himanshu Srivastava, Principal Manager Research, Morningstar Investment Research India, rising global inflation, fear of change in interest rates and geopolitical risk are the main reasons for this selloff.
Ongoing tensions in the Middle East and high crude oil prices have increased inflation concerns. For this reason, investors are now giving up hope of cutting interest rates soon and are turning towards debt instruments of developed markets.
Impact of rupee weakness also increased
The instability and weakness of the Indian rupee against the dollar is also a matter of concern for foreign investors. This affects their returns in dollar terms.
VK Vijayakumar, Chief Investment Strategist, Geojit Investments, says the rupee’s decline and concerns over India’s earnings growth have played a big role in increasing outflows this year.
Still interested in power-construction sector
Despite continuous selling, foreign investors have not completely exited the market. They are still investing in select sectors like power, construction and capital goods. Apart from this, they are also buying mid-cap and some small-cap stocks with strong earnings and good growth.
However, globally investors are now moving towards markets like South Korea and Taiwan, where better earnings are expected due to AI (Artificial Intelligence).
What is FPI and dollar returns?
- FPI (Foreign Portfolio Investment): When foreign citizens or companies invest money in the stock market or mutual funds of another country, it is called FPI. These investors can also withdraw money as soon as they make profits.
- Dollar Returns: Foreign investors invest in India in rupees. If the value of rupee falls against the dollar, they make less profit on converting their money back into dollars, which is called loss of dollar returns.
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