Overview
- National Securities Depository Limited data show Foreign Portfolio Investors withdrew Rs 32,963 crore from Indian equities in May 2026, marking the third consecutive month of net selling and taking year‑to‑date outflows to roughly Rs 2.25 lakh crore.
- The drain followed extreme selling in March and April, when FPIs pulled about Rs 1.17 lakh crore and Rs 60,847 crore respectively, making the March–May period the main source of this year's outflows.
- Market analysts link the exits to weaker domestic corporate earnings, a roughly 6% rupee depreciation this year that cuts dollar returns for foreigners, and large AI‑led rallies in markets such as Taiwan and South Korea that drew capital away from India.
- Geopolitical tensions in West Asia and spikes in Brent crude have raised India’s import bill and inflation risks, which has increased investor caution and pressured the rupee; one report also identified a record single‑day foreign selloff on May 29 driven partly by MSCI index rebalancing.
- While the pace of selling slowed in May, commentators say a sustained return of foreign flows will likely require visible earnings improvement, a firmer rupee, and cooling oil prices, and that continued outflows could weigh on market liquidity and household costs for fuel and fertiliser.