Overseas investors have pulled out more than Rs 1.8 lakh crore from Indian equities so far in 2026, already exceeding the total outflows seen in all of 2025, according to a report by The Economic Times. The selloff comes as a combination of macro and market-specific factors dented sentiment.

A weakening rupee, elevated crude oil prices and limited opportunities in artificial intelligence (AI)-linked investments in India have contributed to a risk-off approach among foreign portfolio investors (FPIs), the report noted.

Selling in Indian equities -- the second highest across Asia and emerging markets after South Korea -- marks the biggest withdrawal by overseas investors in the first four months of any calendar year, the report said, citing data from ETIG and Bloomberg.

The persistent outflows extend a trend that began in September 2024, when FPI sentiment towards India weakened amid a mismatch between corporate earnings growth and elevated valuations. In 2025, FPIs had already pulled out Rs 1.6 lakh crore from domestic equities, which was then the highest annual outflow on record.

The report noted that the latest wave of selling in March was not limited to India, with global AI-driven markets such as Taiwan and South Korea also witnessing outflows.

Across Asia, South Korea has emerged as the most sold market in 2026, recording outflows of $35.3 billion, followed by India at $19.75 billion and Taiwan at $8.50 billion, as per Bloomberg data cited in the report.

In contrast, markets such as Russia and Brazil have attracted foreign capital, with inflows of $20.6 billion and $11.8 billion, respectively.

On the domestic front, FPIs remained net sellers, offloading equities worth approximately Rs 2,468 crore on April 29. However, domestic institutional investors (DIIs) continued to provide support, with net purchases of around Rs 2,262 crore.

What investors can do

According to VK Vijayakumar, Chief Investment Strategist at Geojit Investments, investors can now focus on companies that are coming out with better than expected Q4 results and strong commentary. "There are opportunities in this segment," he added.