Foreign investors continued their relentless sell-off in Indian equities, pulling out ₹60,847 crore ($6.5 billion) in April primarily due to escalating geopolitical tensions and global macroeconomic uncertainties that dampened risk appetite.

With the latest withdrawal, total outflows by Foreign Portfolio Investors (FPIs) have surged to ₹1.92 lakh crore in the first four months of 2026, significantly exceeding the Rs 1.66 lakh crore outflow recorded in the entire calendar year 2025, according to NSDL data.

FPIs remained net sellers in all months of 2026 except February. They withdrew ₹35,962 crore in January, followed by an infusion of ₹22,615 crore in February, the highest monthly inflow in 17 months.

However, the trend reversed sharply in March, with a record outflow of ₹1.17 lakh crore, and continued into April, with withdrawals of ₹60,847 crore, the data showed.

Market participants attributed the sustained selling pressure to a mix of global macroeconomic headwinds and heightened geopolitical risks.

Himanshu Srivastava, Principal Manager Research at Morningstar Investment Research India, said April began with heavy selling as escalating tensions in the Middle East pushed crude oil prices higher, reviving concerns around global inflation.

This, in turn, led to reduced expectations of near-term rate cuts and kept global bond yields elevated, weighing on investor sentiment towards emerging markets, including India.

Vaqar Javed Khan, Senior Analyst Fundamental at Angel One, described April's outflow as a "textbook risk-off reaction" to escalating US-Iran tensions.

He added that crude oil prices crossing USD 100 per barrel, the rupee weakening towards Rs 92 against the US dollar, and the resurgence of inflation and current account deficit concerns have made India's relatively high Nifty valuation of around 21 times price-to-earnings appear expensive amid global uncertainty.

Khan said that if the Iran ceasefire holds and WTI crude falls below $90 per barrel, flows could stabilise with selective FPI inflows, supported by strong domestic institutional investor (DII) buying of around ₹1.7 lakh crore year-to-date and an expected Nifty earnings growth of 16 per cent CAGR between FY26 and FY28.

However, he cautioned that while domestic flows may provide a cushion, developments such as tensions around the Strait of Hormuz or a spike in US 10-year bond yields above 4.5 per cent could trigger renewed selling pressure.

Published on May 1, 2026