Foreign Portfolio Investors’ share of Indian equities has fallen to its lowest level in nearly 14 years, even as domestic institutions have quietly overtaken them as the larger stakeholder in India’s stock market — a structural shift playing out against the backdrop of another week of sustained foreign selling.
According to NSDL data, FPIs were net sellers in Indian equities for four of the five trading sessions this week ended May 8, 2026. Monday, May 4, saw net equity outflows of ₹8,035.69 crore through stock exchanges. Tuesday offered a brief respite, with FPIs turning net buyers to the tune of ₹2,969.02 crore — the only session this week where they were on the buying side. Selling resumed on Wednesday with outflows of ₹3,399.03 crore, followed by the steepest single-day selling of the week on Thursday at ₹5,697.61 crore. By Friday, May 8, the pace had nearly halted, with net equity outflows through exchanges narrowing sharply to just ₹69.31 crore, as gross purchases of ₹18,514.38 crore nearly matched gross sales of ₹18,583.69 crore.
On an aggregate basis — combining stock exchange and primary market routes — FPI equity outflows for the week stood at ₹14,207.20 crore.
FPI holdings drop, DIIs rise
The weekly numbers are part of a larger, more consequential story. According to JM Financials’ monthly tracker for April 2026, FPI ownership of Indian equities now stands at 14.7 per cent — its lowest since June 2012 — down from 19.9 per cent a decade ago. Meanwhile, Domestic Institutional Investors have risen to hold 18.9 per cent of Indian equities, surpassing FPI holdings for the first time since December 2024 and continuing to widen that gap.
Dr V K Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, put the year-to-date picture in perspective. “This takes the total FPI sell figure through exchanges in 2026, so far, to ₹2,18,540 crore,” he said, while noting that primary market investment by FPIs has held up, with “total investment of ₹12,340 crore, so far, this year.”
N ArunaGiri, CEO of TrustLine Holdings, flagged that India is losing out on emerging market allocations to peers. “At a time when Korea received nearly $4 billion and Taiwan around $5.5 billion in flows, India is still not getting its due share of emerging market allocations. This clearly indicates that FIIs currently do not find India as attractive from an allocation perspective,” he said. The consequence, he noted, has been visible in market structure: “Large caps have relatively underperformed, while strong domestic flows have continued to support the SMID segment.”
Structural diversions
The reason India is being passed over is partly structural. Vijayakumar pointed to the global technology rally as a key factor diverting flows. “The impressive earnings growth expected in markets like South Korea and Taiwan this year, thanks to the AI boom, is attracting FPI flows into these markets in a big way,” he said, adding that “currency depreciation and concerns surrounding earnings growth in India have been important factors driving FPI flows out of India this year.”
Not all FPI activity this week was selling. Vijayakumar noted that even amid the broader exodus, “FPIs have been investing in certain sectors like power, construction and capital goods,” and have shown “preference for mid and selectively for small cap stocks which have high growth potential and are delivering good results.”
ArunaGiri cautioned that a meaningful market recovery in large caps would need a change in foreign investor behaviour. “As long as FIIs do not meaningfully increase India allocations, the market is likely to remain highly stock-specific, driven by earnings visibility and bottom-up opportunities rather than momentum rally led by large caps,” he said.
Published on May 9, 2026