Foreign investors continued to pull out of Indian equities, with net outflows reaching Rs 27,048 crore so far this month. The selloff reflects a cautious stance among global investors amid changing global macroeconomic conditions and ongoing geopolitical uncertainty.NSDL data shows that foreign portfolio investors (FPIs) have pulled out a total of Rs 2.2 lakh crore from Indian equity markets so far in 2026. This is already more than the Rs 1.66 lakh crore withdrawn during the entire 2025.The selling trend has been largely consistent throughout the year, with FPIs becoming net buyers only in February. In January they sold Rs 35,962 crore. This pattern was broken in February with inflows of Rs 22,615 crore, the highest monthly inflows seen in 17 months.However, the momentum quickly reversed after that. March saw huge sales with record withdrawals of Rs 1.17 lakh crore, followed by sales of Rs 60,847 crore in April. The negative trend has continued in May as well, with withdrawals already exceeding Rs 27,000 crore.Market experts say several global factors are driving this continued exit. Himanshu Srivastava, principal-manager research, Morningstar Investment Research India, told PTI that the outflows reflect continued uncertainty around global growth, rising geopolitical tensions in various regions and volatility in crude oil prices, all of which have reduced appetite for emerging markets like India.He said the strengthening of the US dollar and higher US bond yields have further influenced investor behavior, making developed markets comparatively more attractive due to higher returns and safe haven.Srivastava also said global concerns over inflation and uncertainty over the timing and pace of interest rate cuts by major central banks are impacting capital allocation decisions.Separately, VK Vijayakumar, chief investment strategist at Geojit Investments, said continued FPI selling as well as widening current account deficit have put pressure on the Indian rupee.He said, “At the beginning of the year, the rupee was at 90 against the US dollar. On May 15, it crossed the 96 mark and reached 96.14.”He further cautioned that the rupee may face further weakness if foreign outflows continue and crude oil prices remain high. Vijayakumar also pointed to the global shift in capital towards artificial intelligence-focused companies, which has resulted in reduced allocation in markets like India, which is considered a laggard in the AI-driven investment cycle.“This trend may reverse when the AI business, which appears to be in bubble territory, finally cools down,” he said.
