Mumbai2 hours ago
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Foreign portfolio investors (FPIs) have withdrawn more than ₹62,853 crore from the Indian stock market in the first 15 days of June. According to National Securities Depository Limited (NSDL) data, with this latest withdrawal, the total foreign fund withdrawal from Indian equities so far in the year 2026 has reached ₹2.87 lakh crore.
This figure is much more than the amount of ₹ 1.66 lakh crore withdrawn during the entire calendar year of 2025. The main reasons behind this continuous selling by foreign investors are increasing geopolitical tensions, concerns about global economic growth and continuous weakness of the rupee against the dollar.
3 big reasons behind foreign selling
Himanshu Srivastava, Principal Manager Research, Morningstar Investment Research India, has clarified the main reasons behind the continuous selling by foreign investors. According to him, investors are currently going through an environment of extreme uncertainty regarding the future of interest rates of major central banks, geopolitical developments and global growth.
- Trend towards safe assets: In such uncertain times, strategic de-risking is often seen in emerging markets. Investors looking for safety rebalance portfolios towards developed markets and safe assets.
- India’s expensive valuation: Apart from this, India’s valuation is currently a bit expensive compared to many other emerging countries. This is the reason why foreign investors have adopted a selective approach regarding allocation in India.
- Weakening Rupee: Market experts say that the continuous decline in the rupee has also become a major reason for foreign investors moving out.
Rupee has fallen 6% so far in the year 2026
Despite all the efforts made by RBI to stabilize the currency, the declining trend in the Indian currency continues. The rupee has weakened by about 6% so far in the year 2026 and by about 10% in the last one year.
The rupee has fallen from the earlier mid-80 level to around 95 against the US dollar. Due to this persistent depreciation, there is continuous outflow from the market.
The pace of selling stopped in the last days of the week
However, the pace of withdrawals by FPIs has decreased significantly in the last week. This indicates that even though risk aversion remains high in the market, the intensity of foreign selling has gradually reduced. On Friday, FPIs sold shares worth only ₹1,082 crore in the cash market, which is much less than before.
Fall in crude prices positive for India
VK Vijayakumar, Chief Investment Strategist, Geojit Investments, said that due to recent geopolitical developments and expectations of a peace agreement between America and Iran, there has been a sharp improvement in the prices of Brent crude. Crude oil has now fallen below $87 per barrel.
This is a big positive news for a major oil importing country like India, because India is facing a balance of payments deficit of about $60 billion in the financial year 2027 (FY27).
Government and RBI took 4 big steps to increase foreign investment
FPI plays an important role in bridging the Current Account Deficit (CAD) and maintaining the balance of payments. In view of this, policymakers have announced several steps to attract foreign capital…
- Hedging Cost: The Reserve Bank of India (RBI) has decided to itself absorb the hedging cost incurred on FCNR deposits raised by commercial banks.
- Forex Swap: The central bank has expanded the scope of the forex swap window.
- Government Bonds: Access for foreign investors to government bonds has been further simplified and expanded through the Fully Accessible Route (FAR).
- Investment Limit: The investment limit for NRIs and Overseas Citizens of India (OCIs) has been increased in the country’s equity market.
FPIs expressed confidence in debt market after exiting equity
In contrast to the heavy selling seen in the stock market, foreign investors have shown good confidence in Indian debt securities. In the first 15 days of June, FPIs have invested more than ₹13,200 crore in debt securities through the FAR route. Including this investment, the total debt investment through this channel so far this year has reached about ₹ 28,000 crore.
The market will keep an eye on these 4 factors next week
According to Pavitra Mukherjee, Deputy Vice President-Research, Bajaj Broking, the trend of FPIs in the coming week will depend on these key factors…
- On the developments in the ongoing peace talks between America and Iran.
- On Policy Decisions of the US Federal Open Market Committee (FOMC).
- On the rate decision of the Bank of Japan (BOJ).
- On the statements coming from the major central banks of the world.
What is ‘Fully Accessible Route’ (FAR)?
This is a special medium launched by the Reserve Bank of India (RBI), under which foreign investors (FPIs) get complete freedom to invest in selected government securities i.e. government bonds without any upper limit or restriction. Through this, the Indian government easily attracts foreign capital into the country’s debt market, which helps in raising funds for the country’s development works.
