Foreign investors continued to pare their exposure to Indian equities, withdrawing ₹14,231 crore so far this month driven by persistent global macroeconomic uncertainties.

With this, the total outflow of Foreign Portfolio Investors (FPIs) from the equity market has crossed ₹2 lakh crore in 2026, which is higher than the ₹1.66 lakh crore pulled out during the entire 2025, according to data with the NSDL.

FPIs were net sellers in all months of 2026, except February. They withdrew ₹35,962 crore in January before turning net buyers in February, when they invested ₹22,615 crore, the highest monthly inflow in 17 months.

However, the trend reversed in March, when foreign investors pulled out a record ₹1.17 lakh crore. The selling continued in April with net outflow of ₹60,847 crore and extended into May with withdrawal of ₹14,231 crore so far.

"The selling was largely driven by persistent global macroeconomic uncertainties, particularly concerns around inflation, interest rates and geopolitical risks, which continued to weigh on sentiment toward emerging markets," said Himanshu Srivastava, Principal - Manager Research at Morningstar Investment Research India.

He said uncertainty over the global interest rate trajectory remained a key factor influencing flows. Elevated crude oil prices and lingering geopolitical tensions, especially in West Asia, kept inflation concerns alive globally, prompting investors to reassess expectations of near-term rate cuts by major central banks.

As a result, global bond yields remained relatively firm, enhancing the attractiveness of developed-market fixed income assets and reducing risk appetite for emerging market equities, he added.

Mr. Srivastava also noted that the Indian rupee remained under intermittent pressure, impacting dollar-adjusted returns for foreign investors.

V.K. Vijayakumar, Chief Investment Strategist at Geojit Investments, said that despite the overall selling, FPIs had been selectively investing in sectors such as power, construction and capital goods.

Another major trend was their increasing preference for mid-cap and select small-cap stocks with strong growth potential and healthy earnings performance, he said.

According to Mr. Vijayakumar, currency depreciation and concerns over earnings growth in India had been key factors driving FPI outflows this year.

He added that stronger earnings growth expected in markets such as South Korea and Taiwan, supported by the artificial intelligence boom, was attracting FPI flows to these markets.