Key facts
- Foreign portfolio investors (FPIs) withdrew over Rs 62,800 crore from Indian equities in the first two weeks of June.
- Total FPI outflows from Indian equities have reached Rs 2.87 lakh crore in 2026.
- FPIs have been net sellers in Indian equities every month of 2026 except February.
- The Indian rupee has depreciated nearly 6% in 2026 and about 10% over the past year.
- In contrast to equity outflows, FPIs invested over Rs 13,200 crore in debt securities in early June.
Foreign portfolio investors (FPIs) continued their selling spree in Indian equities during the first half of June, withdrawing over Rs 62,800 crore. This sustained outflow is attributed to a confluence of factors including heightened geopolitical tensions, concerns over global economic growth, and the persistent weakness of the Indian rupee.
Data from the National Securities Depository Ltd (NSDL) reveals that FPIs have been net sellers in most months of 2026, with significant withdrawals recorded in January, March, April, and May. The March outflows were particularly substantial, reaching a record Rs 1.17 lakh crore. While the pace of selling moderated in the latter half of the previous week, overall risk aversion remains elevated.
Analysts suggest that investors are seeking safety and rebalancing portfolios towards developed markets and defensive assets amid uncertainty surrounding central bank interest rate trajectories and global growth prospects. India's relatively high valuations compared to other emerging markets may also be contributing to foreign investors' cautious approach. The depreciation of the Indian rupee, which has weakened significantly against the US dollar, is another key driver of these outflows.
Despite the equity outflows, FPIs showed renewed interest in Indian debt securities, investing over Rs 13,200 crore in the first fortnight of June through the Fully Accessible Route (FAR). Policymakers have introduced measures to attract overseas capital, including expanding forex swap windows and increasing access to government bonds, to support the current account deficit and balance of payments.