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Foreign institutional investors (FIIs) have withdrawn around ₹1.98 lakh crore from Indian equities during the first four months of 2026, according to data available on NSDL. This highlights continued selling pressure as global investors shift allocations to other Asian markets offering better valuations and investment opportunities.
So far in May, there has been no shift in the FII trend as they have offloaded shares worth ₹5,052 crore.
In 2026, 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.
Meanwhile, domestic investors have continued to repose their unstinted faith in Indian equities, demonstrating strong resilience and an impressive capacity to absorb volatility over the past few years, according to brokerage firm Motilal Oswal (MOFSL).
MOFSL, in its latest report, revealed that DIIs have invested over $27.2 billion in 2026 so far in Indian equities, backed by the unwavering SIP run rate.
The selling pressure, already present since 2025, intensified after tensions in West Asia flared up earlier this year, driving crude oil prices significantly higher and reigniting worries over India’s macroeconomic stability.
Since the beginning of the US-Iran war, foreign investors have withdrawn over ₹1 lakh crore from Indian equities. FIIs remained net sellers last year as well, withdrawing ₹166,286 crore from Indian stocks as valuations remained steep and investors found better opportunities elsewhere, while rupee depreciation further eroded returns.
According to Sugandha Sachdeva, Founder of SS WealthStreet, 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.
She further explained that 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.
Sachdeva believes that an immediate trend reversal in May remains unlikely in the absence of a decisive easing in geopolitical risks; flows could begin to stabilise in the near term and gradually turn positive over the course of 2026 as global uncertainties recede and India regains its relative appeal among emerging markets.
“India continues to remain well-placed structurally, supported by strong domestic demand, policy continuity, and ongoing reforms, which underpin its long-term growth story,” she added.
On the other hand, Mahesh M Ojha, AVP - Research at Kantilal Chaganlal Securities, said that FIIs selling may see a pause in May, 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.
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.
Vaamanaa covers business and stock market news. Started in 2020, she has been producing news on digital platforms for over 4.5 years now. She writes on markets, commodities, IPOs, and industry. She has worked for news channels like Jagran New Media and Business Insider India. You can reach out to her at vaamanaa.sethi@htdigital.in.
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