FPI outflows cross ₹1.75 lakh crore in 2026 YTD

What happened and why it matters

Foreign portfolio investors (FPIs) have intensified their selling in Indian equities in 2026, with cumulative outflows crossing ₹1.75 lakh crore by April 25, according to NSDL data. Multiple reports also place the 2026 selloff at over ₹1.8 lakh crore so far, underscoring the scale of the exit. The pace has already surpassed the full-year selling of 2025, when FPIs sold ₹1,59,779 crore of equities, previously the worst annual figure on record per NSDL.

The pullback matters because it reflects a sustained shift in global risk appetite and relative preferences across Asia. India’s equity market has been one of the most sold in the region this year, second only to South Korea, as global funds rebalance amid geopolitical shocks and high US yields. The selling also has a direct link to market volatility, currency moves, and sector-level pressure on heavily owned stocks.

2026 has already overtaken 2025’s full-year selloff

By April 2026, foreign investors had already exceeded 2025’s full-year outflow, with April alone seeing ₹43,967 crore withdrawn as of April 25 (NSDL). Mid-April figures cited by Business Standard put net equity investment by FPIs at negative ₹1,67,974 crore. The outflows include heavy liquidation of existing positions rather than just a pause in new allocations.

The selling has been described as the most by overseas investors in the first four months of any calendar year, based on ETIG and Bloomberg data. The pressure also extended into early April, with FPIs offloading ₹19,837 crore in the first two trading sessions of the month.

Timeline: February relief, then a record March shock

February briefly broke the sell streak, with FPIs infusing ₹22,615 crore, the highest monthly inflow in 17 months. That respite did not hold. March became the inflection point, with record monthly outflows reported at ₹1.17 lakh crore (NSDL cited by Business Standard) and separately at ₹1.14 lakh crore in another NSDL-based compilation.

In the first ten days of April, foreign investors withdrew another ₹48,213 crore ($1.14 billion) from the cash market, per NSDL data. By the first half of April, unloading was still broad-based and concentrated in key sectors, showing that the selloff had not meaningfully reversed.

Sector-wise selling: financials hit hardest in April

NSDL sector data for the first half of April shows financial services taking the biggest hit at ₹19,152 crore. Consumer services saw ₹5,338 crore in outflows, followed by healthcare at ₹4,481 crore. Automobiles and auto components recorded ₹3,704 crore, while oil and gas saw ₹3,352 crore and FMCG ₹2,976 crore.

Selling also extended to telecom, real estate, IT, and construction at lower volumes. Power was the exception, with a marginal net inflow of ₹601 crore in the period, making it the only sector with positive foreign flows.

What is driving the exit: oil, rupee, rates, and relative opportunities

A key trigger cited across sources is the West Asia conflict and its impact on oil and inflation expectations. Brent crude has risen more than 22% since hostilities began on February 28 and was trading near $10 per barrel, according to the article. Morningstar’s Himanshu Srivastava linked the sustained selling to heightened risk aversion as crude rose and global inflation concerns resurfaced.

The macro backdrop also includes tighter global financial conditions. The article notes that elevated US Treasury yields have increased the appeal of dollar-denominated assets, encouraging reallocation away from emerging markets. It also cites US Federal Reserve rates at 3.50–3.75% with no imminent cuts as part of the risk-off setup.

A second pillar is valuation and relative growth expectations. Sriram Velayudhan of IIFL Capital Services pointed to a weak rupee and deceleration in earnings momentum, while also noting that South Korea and Taiwan offered AI and semiconductor exposure at cheaper valuations. VK Vijayakumar of Geojit Investments added that competing Asian markets currently offer stronger earnings growth outlooks than India’s relatively modest FY27 projections.

Regional comparison: India among the most sold markets

Bloomberg data cited in the article shows South Korea displacing India as the most sold market in the region in 2026, with outflows of $15.3 billion. India followed at $19.75 billion, with Taiwan at $1.50 billion. In contrast, Russia received $10.6 billion and Brazil $11.8 billion of foreign capital investment, per the same dataset.

The selloff was not limited to India. Franklin Templeton’s Hari Shyamsunder noted that March saw renewed selling across global AI favourites such as Taiwan and South Korea as well. However, he added that selling abated in Taiwan and South Korea in April, while India was yet to see renewed inflows in the absence of an AI theme.

Ownership signal: FPIs at multi-year lows in NSE-listed companies

The intensity of selling has been visible in ownership metrics. FPI ownership in NSE-listed companies fell to 16.9% in the second quarter of FY26, the lowest in over 15 years, per NSE data. FPI stakes in the Nifty 50 and Nifty 500 also slipped to over 13-year lows of 24.1% and 18%, respectively.

These figures help explain why the flows matter beyond headline numbers. A lower foreign ownership base can reduce the immediate selling overhang, but it also reflects a meaningful reduction in long-term global positioning in Indian equities.

Market impact: index correction, currency stress, and volatility

The selloff coincided with weaker market levels and higher volatility. One data set cited in the article places the Nifty 50 around 23,150 during March, an 11.5% correction from its all-time high of 26,373 reached in January. The India VIX jumped 39% in the same period.

Currency and commodity pressures also featured prominently. The rupee touched a record low of ₹92.43 versus the US dollar in the March turmoil data cited, while crude oil was described as nearly $120 per barrel in that same snapshot. Separately, the broader narrative highlighted Brent trading near $10 per barrel after a 22% rise from late-February hostilities.

A small pause, not a turn: ETF-led inflows late April

India recorded its first net FPI inflow of $106 million in the week ending April 24, 2026, per Elara Capital’s Global Liquidity Tracker, after cumulative withdrawals of about $1 billion in the preceding six weeks. But the composition suggests caution. Long-only funds still saw outflows of around $100 million, while the net positive number was supported by ETF inflows of $120 million and marginal buying by US-domiciled funds.

The article flags that ETF flows are often tactical, driven by global asset allocation rather than India-specific fundamentals. That distinction is important when interpreting a headline inflow in the middle of a broader liquidation phase.

What analysts say could change the flow trend

Angel One’s Vaqarjaved Khan said a reversal would require three conditions: reopening of the Strait of Hormuz, rupee stabilisation, and stronger-than-expected Q4 earnings. As of April 25, the article notes that none of these conditions had been met.

The India-US trade agreement in February 2026, which reduced punitive tariffs on Indian goods from 50% to 18%, was widely viewed as a potential positive trigger. The data, however, shows that outflows accelerated through March and into April despite the deal, indicating that geopolitical risk and global rate uncertainty outweighed the trade tailwind.

Conclusion

2026 has seen an unusually sharp and front-loaded foreign selloff in Indian equities, with outflows exceeding ₹1.75 lakh crore by late April and surpassing the entire 2025 exit. The drivers cited include West Asia-driven oil shocks, rupee pressure, elevated US yields, and a rotation toward AI-linked opportunities in other markets. The first net weekly inflow in late April was small and ETF-led, suggesting a pause in selling rather than a clear reversal. Near-term attention remains on oil and geopolitics, currency stability, and upcoming earnings visibility, which multiple analysts have identified as prerequisites for sustained FPI re-entry.