Foreign investors continued to pull money out of Indian equities in May, with net outflows reaching Rs 27,048 crore so far, according to NSDL data.
The latest withdrawals have pushed total Foreign Portfolio Investor (FPI) outflows from Indian equity markets in 2026 to more than Rs 2.2 lakh crore, surpassing the Rs 1.66 lakh crore withdrawn during the whole of 2025.
The selling trend has remained largely steady throughout the year, with FPIs turning net buyers only once in February. In January, foreign investors sold equities worth Rs 35,962 crore, while February recorded inflows of Rs 22,615 crore, the highest monthly investment in 17 months.
However, the momentum reversed sharply in the following months. March witnessed heavy outflows of Rs 1.17 lakh crore, followed by withdrawals of Rs 60,847 crore in April. The negative trend has continued in May, with outflows already crossing Rs 27,000 crore.
According to media reports, global economic uncertainty, geopolitical tensions and volatility in crude oil prices have weakened investor appetite for emerging markets such as India.
Reports said a strong US dollar and elevated US bond yields have made developed markets more attractive by offering relatively safer and higher returns.
Concerns over inflation and uncertainty surrounding the timing and pace of interest rate cuts by major central banks are also believed to be influencing global investment decisions.
Media reports further said sustained FPI selling and a widening current account deficit have increased pressure on the Indian rupee.
The rupee, which was trading near 90 against the US dollar at the start of the year, reportedly weakened beyond the 96-mark on May 15.
Analysts cited in reports warned that the rupee could weaken further if foreign outflows continue and crude oil prices remain high.
Reports also pointed to a global shift in investments towards artificial intelligence-focused companies, which has reduced allocations to markets such as India, seen as lagging in the AI-driven investment cycle.
