New Delhi: Foreign investors continued to reduce their exposure to Indian stocks, withdrawing Rs 32,963 crore in May. In addition to foreign investment indicators, analysts expect developments related to the West Asian war, crude oil prices, and the Reserve Bank of India’s interest rate decision to determine the direction of the stock market in the eventful week ahead.In 2026 so far, the total outflow of foreign portfolio investors (FPIs) from the stock market has reached just under Rs 2.3 lakh crore, higher than the nearly Rs 1.7 lakh crore withdrawn during the entire year of 2025, according to NSDL data.FPIs were net sellers in all months of 2026, except February. They withdrew Rs 35,962 crore in January before turning net buyers in February, when they invested Rs 22,615 crore, the highest monthly inflow in 17 months.
However, the trend reversed in March, when foreign investors withdrew a record nearly Rs 1.2 lakh crore. The sale continued in April with net outflows of Rs 60,847 crore and extended into May with withdrawal of nearly Rs 33,000 crore.
Market experts said foreign investment firms were selling Indian stocks due to a combination of weak earnings growth, devaluation of the rupee and more attractive opportunities in other markets.
However, the pace of selling has moderated.India’s weak earnings growth, compared to the performance of significantly stronger companies in markets such as the US, Japan, South Korea and Taiwan, has prompted FIIs to shift capital abroad, said VK Vijayakumar, chief investment strategist at Geojit Investments.Analysts said that in the coming week, macroeconomic data announcements, trading activity of foreign investors and the rupee’s trend against the dollar will be key drivers for stocks.“Participants will closely monitor global developments surrounding the situation between the United States and Iran and the movement of crude oil prices, which remain crucial to inflation expectations, currency stability and foreign flows.” said Ajit Mishra, Senior Vice President of Research at Religare Broking.Last week, the benchmark BSE index fell 640 points, or 0.8%, and the NSE Nifty fell 172 points, or 0.7%.
