Foreign portfolio investors (FPIs) have remained persistent sellers in the Indian stock market this year, with cumulative outflows already surpassing the total recorded in the previous calendar year.
The sustained selling pressure comes amid rising global bond yields triggered by uncertainty surrounding the US-Iran war, subdued domestic earnings growth, and continued global capital allocation toward artificial intelligence (AI)-focused companies.
The trend of AI-driven investments attracting global capital flows has also contributed to a shift away from markets such as India, which are perceived as lagging in the AI ecosystem.
FPIs have sold Indian equities worth ₹2,18,273 crore so far in 2026, up to May 20. In the first half of May alone, FPI outflows stood at ₹26,304 crore, according to data from NSDL.
Persistent foreign outflows have weighed on both Indian equities and the domestic currency. The benchmark Nifty 50 index has declined 9.5% on a year-to-date (YTD) basis, while the rupee has weakened to record low levels, breaching the 96 mark against the US dollar.
“Since valuations in India are fair, and even attractive in certain pockets, FPIs may turn buyers, infusing some optimism into the market. Much will depend on crude oil prices and stability in the rupee. Q4 earnings have been encouraging so far. However, the adverse impact of the energy crisis is likely to be reflected in Q1 FY27. If crude oil prices continue to moderate, the remaining quarters could see relatively stable performance,” said V K Vijayakumar, Chief Investment Strategist at Geojit Investments.
Sectors witnessing the highest FPI selling
The Financial Services sector recorded the highest FPI outflows during May 1–15, with foreign investors pulling out ₹17,960 crore. This was followed by the Oil, Gas & Consumable Fuels sector, which saw outflows of ₹6,885 crore, NSDL data showed.
During the first half of May, the Telecommunication sector witnessed FPI selling worth ₹2,542 crore, followed by Information Technology ( ₹1,643 crore), Fast Moving Consumer Goods (FMCG) ( ₹1,625 crore), and Construction Materials ( ₹1,207 crore).
Consumer Durables and Power sectors also witnessed significant outflows of ₹1,162 crore and ₹1,157 crore, respectively.
Meanwhile, sectors such as Construction, Chemicals, Realty, Healthcare, Consumer Services, and Automobiles & Auto Components recorded FPI selling in the range of ₹300 crore to ₹900 crore.
Sectors attracting FPI inflows
Despite broad-based selling, some sectors continued to attract foreign investments. The Services sector saw the highest FPI inflows at ₹7,019 crore, followed by Capital Goods with inflows of ₹2,645 crore and Metals & Mining at ₹1,698 crore.
