Foreign Institutional Investors Remain Net Sellers in India's Equity Market for 2026, Despite Several Factors That May Reinvigorate Investment Flows

Foreign Investor Outflows Continue in Indian Equities

As of March 13, 2026, foreign investors have remained net sellers of Indian equities, with a net outflow of ₹1,07,575 crore in the current year. This trend was evident on Friday, when foreign institutional investors (FIIs) were net sellers of Indian equities worth ₹10,716 crore, marking the largest single-day outflow since October 28, 2025.

Domestic Institutional Investors (DIIs) Emerge as Net Buyers

In contrast, DIIs were net buyers, purchasing shares worth ₹9,977 crore on the same day. During the session, foreign investors bought equities worth ₹11,923 crore but sold shares amounting to ₹22,640 crore. Meanwhile, DIIs purchased shares totaling ₹22,708 crore and offloaded equities worth ₹12,730 crore.

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Geopolitical Tensions and Oil Price Volatility

The weakness in global equity markets, steady depreciation of the rupee, and concerns surrounding the impact of high crude price on India's growth and corporate earnings have contributed to the concern of FPIs. The poor returns from India vis-a-vis other markets during the last 18 months have made India an unattractive destination for foreign investors.

Market Experts Weigh In

VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, believes that FPIs will continue to regard South Korea, Taiwan, and China as better markets to invest in, as they are relatively cheaper than India and have better corporate earnings prospects.

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Seema Srivastava, Senior Research Analyst at SMC Global Securities, attributes the net selling by FPIs to heightened geopolitical tensions between the United States and Iran, which has created a global "risk-off" environment. The sharp rise in crude oil prices has added further pressure on foreign investors.

Key Triggers for FPI Reinvestment

Market experts believe that the following factors could bring back FPIs to India:

1. Ease in crude oil prices: Stabilization or a decline in crude oil prices to below $85-90 per barrel could ease concerns about inflation and fiscal balance.
2. US Fed rate cut: A signal from the Federal Reserve to cut interest rates or adopt a more accommodative stance could lead to a reallocation of capital toward higher-growth emerging markets like India.
3. Macro stability: India's strong economic growth, controlled inflation, and relative macro stability could attract foreign investors back to the market.