Foreign portfolio investors stepped up their withdrawal from Indian equities in May, taking their total exit from the market in 2026 to over Rs 2 lakh crore as sentiment continued to deteriorate due to global economic concerns. NSDL data shows FPIs have pulled out Rs 14,231 crore so far this month, capping a year marked by persistent selling pressure. The cumulative outflow this year has now exceeded Rs 1.66 lakh crore pulled out by foreign investors during the entire 2025. The pattern has been largely negative through 2026, with February being the only exception. January started with FPIs selling equities worth Rs 35,962 crore. However, in February foreign investors briefly changed gears and brought in Rs 22,615 crore, their biggest monthly inflow in 17 months. That momentum did not last. The sharpest reversal was recorded in March, when a record Rs 1.17 lakh crore was pulled out of Indian equities. This was followed by huge withdrawal of Rs 60,847 crore in April, while the same pace continued in May also. “The selling was largely driven by persistent global macroeconomic uncertainties, particularly concerns about inflation, interest rates and geopolitical risks, which weighed on sentiment towards emerging markets,” said Himanshu Srivastava, Principal, Manager Research, Morningstar Investment Research India. According to Srivastava, uncertainty over how global interest rates will move remains at the heart of foreign investors’ behaviour. Higher crude oil prices and unresolved geopolitical tensions, particularly in the Middle East, have fueled inflation concerns around the world, forcing investors to rethink expectations of near-term rate cuts by major central banks. This backdrop has supported strong global bond yields, increasing the appeal of developed market debt instruments, while investor appetite for emerging market equities such as India has weakened. He also said intermittent weakness in the Indian rupee has impacted foreign investors’ returns when measured in dollar terms. Even amid continuous selling, foreign investors have not completely shied away from Indian markets. VK Vijayakumar, chief investment strategist at Geojit Investments, said FPIs have shown selective interest in sectors like power, construction and capital goods. He said mid-cap and some small-cap stocks with strong earnings and growth potential are also attracting investors’ attention. Vijayakumar said currency depreciation and concerns over India’s income growth have played a significant role in shaping FPI outflows this year. He said markets like South Korea and Taiwan are currently seeing strong FPI interest, supported by expectations of better earnings growth linked to the artificial intelligence boom.