FPIs Sell For Third Straight Month In May, Pulling Out ₹32,963 Crore

Foreign portfolio investors (FPIs) remained net sellers of Indian equities for the third month in a row in May 2026. They withdrew a net ₹32,963 crore during the month, according to data from the National Securities Depository Limited (NSDL).

The cumulative outflow from Indian equities since January now stands at ₹2,24,932 crore, a figure that has already surpassed total foreign portfolio investor outflows for the entirety of 2025.

However, the selling was not uniform through the month. The final week showed tentative signs of stabilisation, with a marginal net inflow of ₹502.06 crore recorded on 29 May after a sharp single-day outflow of ₹6,176.80 crore on 25 May.

The intervening sessions swung between inflows of ₹2,564.20 crore on 26 May and outflows of ₹1,330.07 crore on 27 May. In equities specifically, 29 May closed with a net positive of ₹1,505.22 crore.

Monthly Tally For 2026.

• January: ₹35,962 crore outflow.

• February: ₹22,615 crore inflow.

• March: ₹1,17,775 crore outflow, highest of the year.

• April: ₹60,847 crore outflow.

• May: ₹32,963 crore outflow.

• Total 2026 net outflow: ₹2,24,932.

What Is Driving The Selling

The conflict in West Asia has emerged as the key factor behind the recent shift in investor sentiment. Higher oil prices, pressure on the rupee and growing risk aversion in global markets have prompted foreign investors to move money to safer or more attractive destinations.

The rupee weakened to 96.96 against the US dollar before recovering to around ₹95 by 29 May. A decline in Brent crude prices to about $92 a barrel helped support the currency.

Foreign portfolio investors now hold 14.7% of Indian equities, the lowest level in 14 years. In contrast, domestic institutional investors have increased their shareholding to 18.9%.

DIIs Hold The Line

Domestic institutional investors bought every single trading day through May, injecting ₹82,668 crore against the ₹55,963 crore in foreign outflows.

Without that sustained domestic buying, the market impact of foreign selling would have been considerably more pronounced.

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What To Watch

Analysts see the near-term outlook as sensitive to US-Iran developments, crude oil price movements, the Reserve Bank of India's monetary policy trajectory and the progress of the monsoon season.

One potential catalyst for a foreign portfolio investor return is a cooling in artificial intelligence-related valuations in developed markets, which could reduce the relative attractiveness of those positions and revive interest in India.

Source:

The Hindu Businessline