FPI Exodus Deepens as Rs 62,800 Cr Withdrawn from Equities in Early June

In the first half of June, foreign investors significantly intensified their selling activity in Indian equities, offloading shares worth over Rs 62,853 crore. This trend is part of a broader context where Foreign Portfolio Investors (FPIs) have withdrawn a total of Rs 2.87 lakh crore in 2026, a stark increase compared to the Rs 1.66 lakh crore divested throughout the entirety of 2025, according to data from the National Securities Depository Ltd (NSDL). The pressures driving these outflows include heightened geopolitical tensions, concerns over global economic growth, and a persistent weakening of the Indian rupee.

The flow of FPI capital has not shown robust signs of recovery, with consistent monthly withdrawals observed throughout 2026, aside from a temporary inflow in February. Notably, the selling surge peaked in March at Rs 1.17 lakh crore, followed by Rs 60,847 crore in April and Rs 32,963 crore in May. Analysts are closely monitoring various geopolitical factors and impending monetary policy decisions from major central banks, including the US Federal Open Market Committee and the Bank of Japan. These elements are pivotal in shaping FPI behavior in the Indian market.

Market sentiment reflects a cautious repositioning amid rising uncertainty surrounding interest rates and global growth perspectives. Analysts point to India’s relatively high valuations compared to many emerging-market peers as contributing to a selective allocation strategy among FPIs. Additionally, the depreciation of the rupee—having weakened nearly 6% in 2026—has exacerbated these outflows, placing further pressure on market dynamics and investor confidence.

Interestingly, while equity markets faced outflows, FPIs demonstrated a contrasting trend in the debt securities space, investing over Rs 13,200 crore through the Fully Accessible Route in early June. This shift emphasizes a strategic pivot by international investors, likely driven by India’s current account deficit concerns and the geopolitical landscape. In response, policymakers have initiated measures, including wide-ranging incentives from the Reserve Bank of India to attract foreign capital, highlighting the crucial role of FPI flows in mitigating balance of payments challenges.

Source: The Economic Times

(Expert Note: This report was prepared by the Wealthova team.)