Foreign Institutional Investors Siphon ₹1.98 Lakh Crore from Indian Equities in Four Months: Will the Trend Reverse in May?

Foreign Institutional Investors Withdraw ₹1.98 Lakh Crore from Indian Equities in First Four Months of 2026

Foreign institutional investors (FIIs) have continued to sell Indian equities, withdrawing a staggering ₹1.98 lakh crore from the market in the first four months of 2026, according to data available on the National Securities Depository Limited (NSDL). This selling pressure is attributed to global investors shifting their allocations to other Asian markets offering better valuations and investment opportunities.

So far in May, FIIs have continued to offload shares worth ₹5,052 crore, with no signs of a reversal in the trend. The largest single-day outflow in the period occurred on April 2, when FIIs sold Indian equities worth a net ₹19,837 crore. This followed a series of significant selling sessions in March, including net sales of ₹11,299 crore on March 24, ₹10,966 crore on March 20, and ₹10,827 crore on March 16.

In contrast, domestic investors have continued to demonstrate strong resilience and an impressive capacity to absorb volatility over the past few years. According to brokerage firm Motilal Oswal (MOFSL), domestic investors have invested over $27.2 billion in Indian equities so far in 2026, backed by the unwavering Systematic Investment Plan (SIP) run rate.

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The sustained selling trend reflects a mix of factors, including India's relative underperformance over the past 12-18 months, elevated market valuations, and a clear shift in global capital toward markets such as Japan, South Korea, and Taiwan, which are currently benefiting from the AI-driven investment cycle and offering superior near-term earnings visibility.

According to Sugandha Sachdeva, Founder of SS WealthStreet, heightened geopolitical tensions, currency pressures, and elevated crude oil prices have further weighed on sentiment toward emerging markets like India. "A reversal in FII flows will hinge on a few key macro developments, including easing geopolitical tensions, particularly in West Asia, stabilisation or moderation in crude oil prices, and an improvement in global risk appetite," Sachdeva said.

While FIIs may continue to sell in May, Mahesh M Ojha, AVP - Research at Kantilal Chaganlal Securities, believes that the selling pressure may see a pause, supported by resilient domestic fundamentals. "Strong GST month-on-month collections indicate steady economic momentum, while underlying internal triggers remain positive. Although the global environment continues to pose challenges, the strength of India's macroeconomic indicators could help stabilise flows and temper the recent selling pressure," Ojha said.

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