FPI Outflows 2026: Rs 2 Lakh Crore Exit From Indian Equities
Why in the news
Overseas portfolio investors kept selling Indian shares in May 2026, and this year’s total exit has already beaten the whole of 2025.
Key facts
- May 2026 (till the report date): net selling of ₹14,231 crore.
- 2026 total: above ₹2 lakh crore, versus ₹1.66 lakh crore withdrawn in the entire year 2025.
- Data provider: National Securities Depository Limited (NSDL).
- Rupee: weakened to around ₹94-95 per US dollar, and the RBI had to use forex reserves to defend it.
Month-wise pattern in 2026
| Month | FPI position | Detail |
|---|---|---|
| January | Net outflow | – |
| February | Net inflow | ₹22,615 crore, best monthly inflow in 17 months |
| March | Net outflow | Record ₹1.17 lakh crore, worst month of the year |
| April | Net outflow | – |
| May (so far) | Net outflow | ₹14,231 crore |
Reasons for the selling
- Ongoing global macroeconomic uncertainty, including worries over inflation and interest rates.
- Geopolitical risk in West Asia and costly crude oil.
- Falling rupee and concerns about India’s earnings growth.
- Money moving to South Korea and Taiwan, where the AI boom lifted earnings of chip and electronics makers.
Where FPIs still buy
Buying continued in power, construction and capital goods, plus mid-cap and select small-cap companies with solid fundamentals.
Background concepts
- FPIs: non-resident investors in stocks, bonds and derivatives who do not seek control over companies; SEBI is the main regulator and RBI looks after the forex side under FEMA, 1999.
- FPI versus FDI: FPI is liquid and can exit quickly; FDI is long-term, usually a stake of 10% or more, and may bring management say.
- Categories: Category I covers government-linked bodies such as sovereign funds, central banks, multilaterals; Category II covers all others, such as individuals and corporates.
- NSDL: set up in 1996, one of two central depositories along with CDSL, and the main source of FPI flow data.
- Hot money: FPI flows react fast to global cues like interest rates and currency moves.
- Carry trade: borrowing in a low-rate currency to invest in higher-yielding assets elsewhere.
- Rupee link: selling means converting rupees into dollars, which adds pressure on the rupee.
Exam angle
- Regulation: SEBI (FPI) Regulations, 2019; forex oversight under FEMA, 1999.
- Data source is NSDL, not the RBI.
- Impossible Trinity: fixed exchange rate, free capital flow and independent monetary policy cannot all be had; India follows a managed float.