Foreign portfolio investors (FPIs) turned net sellers in Indian equities for the week ended May 22, 2026, withdrawing a net ₹3,325.83 crore according to data from the National Securities Depository Ltd (NSDL). The week was sharply divided with buying in the first two sessions giving way to sustained selling in the final three. On Monday, May 18, FPIs were net buyers to the tune of ₹2,219.43 crore, followed by net inflows of ₹2,168.78 crore on Tuesday, May 19. The trend reversed sharply from Wednesday onward, with FPIs recording net outflows of ₹3,644.35 crore on May 20 - the steepest single-session outflow of the week. Selling continued on Thursday at ₹2,278.61 crore, before moderating to ₹1,791.08 crore on Friday, May 22. As per Himanshu Srivastava, Principal Analyst at Morningstar Investment Research India, the flow trend was mixed in nature with FIIs being net buyers during the first two trading sessions before turning aggressive sellers in the latter half of the week amid weakening global sentiment.
For the month of May, FPIs have cumulatively sold a cumulative ₹32,230 crore on a provisional basis, according to Pabitro Mukherjee, Associate Vice-President – Research at Bajaj Broking. Despite the net outflows, the pace of selling moderated compared to the previous week, which had witnessed significantly higher net outflows. "The moderation in the pace of outflows indicates that investors are gradually becoming more selective rather than adopting a broad-based risk-off approach," Srivastava noted. On the domestic front, domestic institutional investors (DIIs) acted as a significant counterweight, recording net inflows of approximately ₹16,948 crore during the week, effectively absorbing a large share of the foreign selling pressure and preventing a sharper market correction.
Benchmark indices traded with high volatility, swinging between gains and losses as investors navigated heightened market uncertainty. The Nifty traded in the broad range of 23,300-23,850 during the week, testing the upper and lower bands on multiple occasions. The index finally closed the week at 23,719 levels, up by 0.3 per cent. According to market analysts, the choppy trading reflected investor caution amid mixed sectoral cues and geopolitical tensions. The selling pressure was largely driven by heightened geopolitical uncertainty, concerns around developments in the Middle East, firmness in crude oil prices, and volatility in global bond yields.
The reversal in the latter half of the week coincided with a clutch of adverse global developments. The Indian rupee touched a fresh all-time low of ₹96.89 against the US dollar on May 20, adding to pressure on foreign investor sentiment. A Moody's downgrade of the US sovereign rating to Aa1 and US 10-year yields staying elevated kept emerging market risk appetite constrained through the week. A relatively stronger US dollar and uncertainty surrounding the future path of global interest rates also continued to weigh on investor sentiment toward emerging markets, including India. According to analysts, the currency backdrop continues to remain a structural concern, with the Indian rupee trading near weak levels against the US dollar despite resilience in global equities.
Investor sentiment remained cautious due to persistent geopolitical tensions, which continued to keep crude oil prices elevated. Looking ahead, institutional flows are likely to remain sensitive to developments around US-Iran tensions and oil price movement. "FIIs are likely to remain sensitive to global liquidity conditions, geopolitical developments, and valuation comfort, before turning meaningfully constructive on Indian equities," Srivastava said. As analysts noted, broader market stability continues to rely significantly on domestic institutional inflows absorbing periods of FII-led selling pressure, with persistent domestic buying playing a crucial role in preventing sharper downside corrections amid elevated global uncertainty.
