Foreign investors continued the sell-off from Indian stocks in April, withdrawing Rs 60,847 crore from the market. This comes after a massive sell-off in March, when foreign investors have already sold shares worth Rs 1,17,775 crore, according to data from National Securities Depository Limited. Successive withdrawals have pushed cumulative foreign portfolio investor (FPI) inflows from Indian equities to Rs 1,91,969 crore in 2026 so far, indicating continued weakness in foreign investor sentiment towards domestic markets. Market experts said this trend reflects a broader shift in global capital towards Asian economies that are seen as the biggest beneficiaries of the ongoing investment boom led by artificial intelligence. Investor appetite is increasingly shaped by AI trading, especially in markets with large semiconductor and technology players, said VK Vijayakumar, chief investment strategist at Geojit Investments. “AI trade is one of the important factors driving capital flows, especially in South Korea and Taiwan,” he said. He added that countries such as Japan, South Korea and Taiwan are attracting large foreign inflows, while India and many other emerging markets are witnessing an outflow of capital as they face pressures including the energy crisis and weak currencies.
“The important trend in FDI inflows this year is that Japan, South Korea and Taiwan are attracting significant inflows while India and some other emerging markets, facing headwinds from the energy crisis and currency devaluation, are facing outflows,” Vijayakumar noted. According to him, foreign investments are concentrated in a small group of companies that generate strong returns and are closely linked to the AI growth story. “Two companies in South Korea – Samsung and SK Hynix – and one in Taiwan – TSMC – attract the lion’s share of these flows. The excellent results posted by these companies provide essential support for FPI flows into these markets,” he added. Vijayakumar said India could continue to experience foreign portfolio investment outflows as long as the global AI investment cycle remains the dominant market driver. “As long as AI trading continues, the trend of foreign portfolio investment inflows from India is likely to continue,” he said, while also warning that there are concerns about overvaluation of AI-related stocks.