Foreign investors have withdrawn over ₹62,853 crore from Indian equities in the first fortnight of June, according to The Economic Times and The Hindu BusinessLine. This follows significant outflows in previous months, with total withdrawals by Foreign Portfolio Investors (FPIs) from Indian equities surging to ₹2.87 lakh crore so far in 2026, already surpassing the ₹1.66 lakh crore pulled out during the entire calendar year 2025. The sustained selling pressure reflects heightened geopolitical tensions, concerns over global economic growth, and persistent weakness in the rupee. As per Business Standard, with the latest outflows, total withdrawals have now reached ₹2.87 trillion in 2026, significantly exceeding the previous year's full-year total.
According to Dalal Street Investment Journal, FPI ownership in Indian equities is at a 15-year low, marking a significant departure from the traditional narrative of global capital rotation. The outflows are driven by multiple domestic factors beyond geopolitical concerns, with the rupee depreciating nearly 10% over the past year, sliding towards ₹95.5 against the dollar. As reported by DSIJ, hedging costs on INR exposure have risen, quietly eroding returns before positions are evaluated, while the Nifty 50 is currently trading at nearly 20x trailing earnings against an MSCI EM forward PE of approximately 13x. The gap between India's premium valuations and global emerging market benchmarks remains wide, demanding an earnings growth story that has not materialized.
According to NSDL data reported by The Economic Times, FPIs have remained net sellers in every month of 2026 except February. They withdrew ₹35,962 crore in January before turning net buyers in February, investing ₹22,615 crore, marking the highest monthly inflow in 17 months. However, the trend reversed sharply in March with record outflows of ₹1.17 lakh crore, followed by net outflows of ₹60,847 crore in April and ₹32,963 crore in May. In June, FPIs have already withdrawn ₹62,853 crore during the first two weeks of the month, as reported by Business Standard.
As reported by The Economic Times, Himanshu Srivastava from Morningstar Investment Research India noted that investors continue to navigate an environment marked by elevated uncertainty around central bank interest-rate trajectories, geopolitical developments, and global growth concerns. According to DSIJ, India's relatively rich valuations compared with several emerging-market peers may have prompted foreign investors to adopt a more selective approach towards allocations. The persistent depreciation of the rupee, which has fallen from the mid-80s level to about 95 against the US dollar, represents a significant challenge for dollar-denominated FPIs, with the currency weakening nearly 6% so far in 2026 and around 10% over the past year. Market participants identified the rising hedging costs on INR exposure as another key factor, with the RBI struggling to hold the line amid import stress and a widening current account deficit.
Given the importance of foreign portfolio flows in financing the current account deficit and supporting the balance of payments, policymakers have announced a series of measures to attract overseas capital, including the RBI absorbing hedging costs on FCNR deposits, expanding the forex swap window, increasing access to government bonds through the Fully Accessible Route (FAR), and raising investment limits for non-resident Indians and overseas citizens in domestic equities. In contrast to the equity outflows, FPIs invested more than ₹13,200 crore in debt securities through the FAR route during the first fortnight of June, taking total investments through this channel to nearly ₹28,000 crore so far this year, as reported by The Economic Times. As per DSIJ, domestic institutional investors (DIIs) absorbed over ₹66 billion in FPI selling in 2025, with mutual fund flows alone crossing ₹45 billion, fully offsetting FPI selling through the SIP culture.
