Foreign portfolio investors (FPIs) have pulled out a total of ₹1,89,991 crore from equities so far in 2026, indicating continued caution in the face of global uncertainties and tight liquidity conditions. A weaker rupee, higher oil prices, and limited AI investment opportunities in the country have all fueled risk-off sentiment.
However, experts chiefly believe that the outflows are being driven by the global AI-led rally, which is attracting significant capital into a handful of technology stocks in markets like the US, South Korea, and Taiwan.
FPIs have remained net sellers in 2026 thus far, with the trend becoming more prominent in recent months. In April, selling was at ₹58,869 crore, following a higher outflow of ₹1,17,775 crore from March. February’s net inflows of ₹22,615 crore were insufficient to overcome January’s high selling, which totaled ₹35,962 crore.
FPI flows have been volatile in recent years, with dramatic swings between inflows and outflows. In 2025, foreign portfolio investors sold ₹1,66,286 crore of Indian shares. FPIs invested ₹1,71,107 crore in 2023, indicating better global risk appetite and domestic development prospects.
In 2022, global tightening and geopolitical uncertainty led to substantial selling, totaling ₹1,21,439 crore. In 2024, foreign investors took a cautious and balanced approach, with net inflows of only ₹427 crore.
Why are FPIs selling?
Mohit Gulati, CIO and managing partner of ITI Growth Opportunities Fund, said that FPIs are not selling India because India is broken. They are selling India because the opportunity cost of not being overweight US tech has rarely been this punishing.
The more important question is whether this creates a structural entry point. India’s fundamentals have not deteriorated in line with the outflow narrative. FPI selling has compressed valuations in pockets of the market that deserve a second look. Patient money should be paying attention, believes Gulati.
Further, Dr. VKVijayakumar, Chief Investment Strategist, Geojit Investments Ltd, added that the principal reason for the selling is the global AI trade which is attracting massive amount of capital flows to AI stocks in the US, South Korea and Taiwan. This AI trade is a concentrated trade in a few stocks. So long as the AI trade continues FPI selling in India, particularly in largecaps, will continue.
When will the FPI trend reverse?
According to experts, the ₹1.9 lakh crore FPI outflow from India in 2026 reflects a global risk-off shift rather than weak domestic fundamentals. Capital is chasing high-growth AI stocks like Nvidia, Microsoft, Alphabet, and Meta. However, stretched valuations could trigger a correction, potentially reversing FPI outflows.
Vijayakumar beleives that the AI trade is unlikely to last long. Already valuations are reaching unjustifiable levels. A correction in AI stocks can reverse the trend of FPI selling in India.
Further, Gulati explained in depth that the ₹1.9 lakh crore FPI outflow from Indian equities in 2026 is not a verdict on India rather it is a textbook risk-off rotation. When Alphabet, Microsoft, Meta, and Nvidia are printing earnings that would make any capital allocator pause, the calculus for taking on emerging market risk becomes harder to justify.
“Why absorb currency volatility, regulatory uncertainty, and liquidity premiums when the S&P’s AI infrastructure complex is delivering compounding returns with the perceived safety of developed market balance sheets?
This is not a new story. Every time the US enters a high-conviction secular cycle; the dot-com build-out, the post-GFC recovery, and now the AI supercycle — global capital gravitates home, said Gulati.
Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
