FPI exodus in the four months of 2026 exceeded all of last year

Mumbai: Foreign investors have dumped over ₹1.8 lakh crore worth of Indian equities so far in 2026, surpassing the 2025 total, as a weak rupee, elevated oil prices and limited AI investment opportunities in the country fueled risk-off sentiment.

Data from ETIG and Bloomberg show that sales of domestic equities by foreign investors in the first four months of any calendar year – the second highest across Asia and emerging markets.

The erratic outflows are an extension of selling by foreign portfolio investors (FPIs) since September 2024, when sentiment towards India soured after corporate earnings growth failed to match buoyant share valuations. In 2025, FPIs pulled ₹1.6 lakh crore from stocks, the highest in a single year so far.

“Foreign outflows are driven by several factors such as a weaker rupee and slowdown in earnings growth,” said Sriram Velayudhan, senior vice-president, IIFL Capital Services. “South Korea and Taiwan saw increased foreign interest as these offered bets on AI and semiconductor themes at cheap valuations.”

Just as the withdrawal seemed to be winding down this year, the West Asian conflict that began on February 28 revived the flight to safety, with foreign investors stepping up their selling amid worries about the rupee’s record fall and the impact of higher oil prices on the currency.

Risk-off sentiment in Asia

“At the end of 2025, valuations in India were relatively less expensive and in the first two months of 2026, flows were largely neutral, but the thesis changed rapidly as global investors sold around $12 billion worth of shares in India,” said Hari Shyamsundar, VP and senior client portfolio manager, Franklin Tempe.

The renewed sell-off in March affected not only India but also global AI favorites like Taiwan and South Korea. South Korea displaced India as the top selling market in the region with an outflow of $35.3 billion in 2026 due to strong sales across Asian markets. According to Bloomberg data, India is second with $19.75 billion followed by Taiwan with $8.50 billion. Russia received the most foreign capital investment at $20.6 billion, followed by Brazil at $11.8 billion.

“Foreign selling was sharper at around $21-26 billion in these markets, clearly marking the risk-off sentiment as Asia became vulnerable due to the West Asia war,” said Shyamsundar.

Sales in Taiwan and South Korea declined in April but India has yet to see renewed flow in the absence of an AI theme, he said.