Financial Sector Sees Significant Outflows of ₹19,000 Crore in April, with IT, FMCG, and Auto Sectors Also Affected

Foreign Portfolio Investors Continue to Sell Indian Equities

Foreign Portfolio Investors (FPIs) maintained a strong selling stance in Indian equities during the first half of April 2026, unloading stocks valued at ₹48,141 crore. The financial services sector was the hardest hit, with FPIs selling stocks worth ₹19,152 crore, followed closely by consumer services (₹5,338 crore) and healthcare (₹4,481 crore).

Additional key sectors that experienced significant outflows included automobiles and auto components (₹3,704 crore), oil & gas (₹3,352 crore), and FMCG (₹2,976 crore), reflecting a widespread risk-averse attitude. Selling pressure was also observed in the telecom, real estate, IT, and construction sectors, although to a lesser degree.

Conversely, only a few sectors, such as power (₹601 crore) and utilities, saw slight inflows, indicating selective buying amidst the overall downturn. As per NSDL data, foreign portfolio investors divested Indian stocks amounting to ₹1,17,775 crore in March. The financial services sector witnessed the largest impact from these outflows, with investors withdrawing ₹60,655 crore, which represents more than 50% of the overall outflows.

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FPIs' Selling Mode Continues Due to Global Economic Uncertainty

Experts point out that the energy crisis caused by the conflict in West Asia, along with the potential repercussions for the Indian economy and the ongoing decline of the rupee, has kept FPIs in a selling mode. Other markets, such as South Korea and Taiwan, are viewed as more appealing from the FPI standpoint, as they are projected to deliver significantly better earnings growth compared to the modest growth anticipated in India for FY27.

Market Valuations Not Yet Compelling Buying Opportunities

The significant drop in the market following the start of the war has resulted in fair valuations; however, they are not yet considered compelling buying opportunities, believes analysts.

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FPIs' Selling of Financial Stocks Explained

Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Ltd, explained that financial stocks account for the major part of FPI's assets under custody. So when they are on a sell mode they sell stocks which are liquid and easy to sell. He also highlighted that last year was mainly a year of AI trade, with AI stocks delivering superior returns. India being an AI laggard couldn’t benefit from this. The superior performance of markets like South Korea and Taiwan was driven by the impressive earnings growth of AI stocks in these markets.

Future FPI Flow Expected to Remain Volatile

Shrikant Chouhan, Head of Equity Research at Kotak Securities, said global equity markets continue to be driven largely by news flows around the West Asian conflict and related negotiations, leading to sharp divergence in returns across geographies. He noted that India has also entered the Q4FY26 earnings season, with expectations of marginal-to-modest growth. On the macro front, March CPI inflation (based on the new series) stood at 3.4% year-on-year, while goods exports declined 7.4% YoY to $38.9 billion and imports fell 6.5% YoY to $59.6 billion. Given these factors, Chouhan expects FPI flows to remain volatile in the near term.