Foreign investors continued to exit Indian stocks in April, offloading Rs 48,213 crore ($5.14 billion) from the cash market in just the first 10 days of the month, as global uncertainty and geopolitical tensions continued to weigh on sentiment. This continued selling comes after a historic decline in March, when foreign portfolio investors (FPIs) walked out with Rs 1.17 lakh crore (about $12.7 billion), representing the largest monthly outflow ever. The trend reflects a sharp turnaround from February, which saw inflows of Rs 22,615 crore, the strongest in 17 months. With April activity, cumulative FDI inflows for 2026 have now reached Rs 1.8 lakh crore, according to NSDL data. Ongoing displacement is due to a combination of global macroeconomic pressures and increasing geopolitical risks. Analysts point to growing caution among investors as tensions escalate in West Asia, affecting broader market behavior. The selling was largely a result of increased risk aversion, said Himanshu Srivastava, research director at Morningstar Investment Research India.
He pointed out that the situation in West Asia pushed crude oil prices to rise, which led to renewed concerns about global inflation. VK Vijayakumar, chief investment strategist at Geojit Investments, also cited the conflict-related energy crisis in West Asia as a key factor, adding that its potential impact on the Indian economy, coupled with the ongoing depreciation of the rupee, has kept foreign investors on the sidelines. He added that other Asian markets, including South Korea and Taiwan, are currently considered more favorable by foreign investment indices given their relatively stronger earnings growth outlook, compared to India’s more modest FY27 outlook. Despite the announcement of a ceasefire between the United States and Iran, there was little change in investor behavior. “FIIs used the relief rally as a liquidity window to exit further,” said Vakarjaved Khan, senior fundamental analyst at Angel One. Khan said any reversal in flows would depend on key developments, including the credible reopening of the Strait of Hormuz, a stabilizing rupee, and a positive surprise from India’s fourth-quarter earnings season. “Flows could reverse quickly, but only if macro conditions begin to support such a shift,” he added.