Foreign investors continued to withdraw from Indian stocks, with net outflows reaching Rs 27,048 crore so far this month. The selling spree reflects the cautious attitude among global investors amid shifting global macroeconomic conditions and persistent geopolitical uncertainty.Data released by NSDL shows that foreign portfolio investors (FPIs) have withdrawn a total of Rs 2.2 lakh crore from Indian stock markets in 2026 so far. This is already higher than the Rs 1.66 lakh crore withdrawn during the entire year of 2025.The selling trend remained largely flat during the year, with foreign portfolio investors turning into net buyers only in February. In January, they offloaded Rs 35,962 crore. February briefly broke this pattern with inflows of Rs 22,615 crore, the highest monthly investment in 17 months.However, the momentum reversed sharply after that. March witnessed a sell-off with record outflows of Rs 1.17 lakh crore, followed by Rs 60,847 lakh crore in April. The negative trend continued in May, with withdrawals already crossing Rs 27,000 crore.Market experts say multiple global factors are driving this sustainable exit. The outflows reflect continued uncertainty over global growth, rising geopolitical tensions across regions, and volatility in crude oil prices, all of which have dampened appetite for emerging markets like India, Himanshu Srivastava, principal research director at Morningstar Investment Research India, told PTI.
He added that the strength of the US dollar and rising US bond yields further influenced investor behaviour, making developed markets relatively more attractive due to higher yields and safer positions.Srivastava also noted that global concerns about inflation and uncertainty about the timing and pace of interest rate cuts by major central banks continue to influence capital allocation decisions.Separately, Geojit Investments chief investment strategist VK Vijayakumar said the ongoing FPI selling, coupled with widening current account deficit, has increased pressure on the Indian rupee.“At the beginning of the year, the rupee was at 90 against the US dollar. On May 15, it crossed the 96 level to touch 96.14,” he said.He also warned that the rupee could face further weakness if foreign outflows continue and crude oil prices remain high. Vijayakumar also pointed to the global shift in capital towards AI-focused companies, which has led to lower allocations to markets like India, which are seen as lagging behind in the AI investment cycle.“This trend may reverse when AI trading, which appears to be in bubble territory, eventually calms down,” he added.
