Foreign portfolio investors (FPIs) have pulled a record ₹3.08 trillion ($32.73 billion) out of Indian equities in just nine months of calendar year 2026 (CY26) – nearly double the ₹1.66 trillion withdrawn in CY25. In CY24, their net investment totaled ₹427 crore, data shows.
According to National Securities Depository Ltd (NSDL) data, foreign investors have been net sellers in the secondary market, withdrawing ₹3.64 trillion ($38.69 billion) through October 12. The primary market, however, attracted net inflows of ₹56,485 crore ($5.97 billion) from them during the period, reflecting continued participation in new share issuances even as they reduced exposure to listed stocks.
The 2026 pullout, analysts said, comes amid rising US bond yields that breached the 5.2 per cent mark recently, a rally in artificial intelligence-related stocks globally and concerns over persistently high crude oil prices in the backdrop of the West Asia war.
The selling pressure, in fact, has intensified in recent months. After offloading equities worth ₹35,861 crore in September, FPIs sold another ₹47,417 crore through October 12, indicating that foreign outflows remain unabated.
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Global money, according to Jignesh Desai, CEO – Institutional Equities at Centrum Broking, is chasing the AI and semiconductor trade in the US, Taiwan and Korea. India, he said, has very little to offer on that front, so it has become the market FPIs sell to fund those positions.
"The weak rupee is adding to it, as it cuts dollar returns. Valuations still look rich for the earnings growth, and high crude and US yields have added to the worry. Strong SIP flows have also made exiting easy, because FPIs can sell in size and the market holds up," Desai explains.
The sustained selling by overseas investors has weighed on domestic equities, with the benchmark Sensex and Nifty 50 down 15.60 per cent and 14.4 per cent, respectively, so far this year.
Domestic institutional investors (DIIs), meanwhile, have continued to buy, providing a counterweight to foreign selling. Their cumulative net investment in equities has reached ₹6.83 trillion so far in CY26, according to the latest available data.
For comparison, DIIs recorded net inflows of ₹5.26 trillion in CY24 and ₹7.88 trillion in CY25, highlighting the scale of domestic institutional buying this year.
The road ahead
The sharp rise in US Treasury yields has made American debt more attractive to foreign investors, reducing the relative appeal of riskier emerging-market assets such as Indian equities, analysts said.
The yield on the US 10-year Treasury bond has climbed above 5.2 per cent, providing investors with higher returns from a relatively low-risk asset.
“From the FPI perspective, pulling money out of India is rational since the risk-free return from the 10-year US bonds breached the 5.2 per cent mark recently. So long as the US bond yields remain elevated, FPIs will continue to sell,” said V K Vijayakumar, chief investment strategist at Geojit Investments.
Elevated crude oil prices (Brent testing the $100 a barrel mark) have added to the pressure, raising concerns over India's macroeconomic outlook and corporate earnings.
Over the next 12 months Desai expects the FPI selling to slow. For flows to turn, the AI trade, he suggests, has to cool and the rupee has to stabilise as crude eases and the CAD narrows.
“Of these, the AI trade matters most, since that is where the money leaving India has gone, and any correction there would send some of it back to markets like ours. Indian earnings also need to see upgrades. Without them, a cheaper market alone won’t be enough to bring FPIs back. US rate cuts and a clear US-India trade deal would help,” Desai said.