Foreign investors withdraw ₹27,048 crore from Indian markets in May:Sold ₹2.2 lakh crore so far in 2026

Foreign investors (FPIs) have withdrawn ₹27,048 crore cash from the Indian stock market so far this month (May). Due to the global economic environment and geopolitical tensions, foreign portfolio investors are continuously reducing their stake in the Indian equity market. With this latest selling, the total outflow in the year 2026 so far has crossed ₹2.2 lakh crore, which is more than the total selling of the year 2025. FPI sold every month except February According to National Securities Depository Limited (NSDL) data, foreign investors have been net sellers every month in the year 2026 except for the month of February. In January, investors withdrew ₹35,962 crore from the market. After that, the trend changed in February and they invested ₹22,615 crore, which was the largest inflow in a single month in the last 17 months. Record of ₹1.17 lakh crore was made in March After relief in February, foreign investors sold a record ₹1.17 lakh crore worth of shares in March. This selling spree continued in April, when there was a net outflow of ₹60,847 crore from the market. This weakness persisted in May as well, and so far more than ₹27,048 crore has been withdrawn. The total selling of ₹2.2 lakh crore so far in the year 2026 is significantly higher compared to the entire previous year. In the year 2025, foreign investors withdrew a total of ₹1.66 lakh crore from the Indian stock market during the entire year. This figure has been surpassed in just five months this year. Pressure increased due to strengthening of Dollar-US Bond Yield Himanshu Srivastava, Principal – Manager Research at Morningstar Investment Research India, commented on this trend that uncertainty regarding global growth, ongoing geopolitical tensions in key regions, and volatile crude oil prices have weakened investor sentiment towards emerging markets. He further said that a strong US dollar and elevated US bond yields are the main reasons for this sell-off. Better returns in developed markets have increased the attraction of safe assets and investors are adopting a defensive stance. Additionally, uncertainty regarding global inflation and the timing of interest rate cuts by central banks is also affecting fund allocation decisions. Pressure on Rupee Increases, Reaches ₹96.14 Level According to V K Vijayakumar, Chief Investment Strategist at Geojit Investments, the rupee is facing heavy pressure due to continuous selling by foreign investors and rising current account deficit. At the beginning of the year, the rupee was at the 90 level against the dollar, which crossed the 96 level on May 15 and reached 96.14. Funds are being diverted towards AI companies V K Vijayakumar stated that if foreign investors’ selling continues and crude oil prices remain high, the rupee could weaken further. Along with this, large-scale investments are being made globally in companies focusing on Artificial Intelligence (AI). Due to this, funds are being diverted from countries like India, which are considered slightly behind in the AI sector. However, when the current bubble in AI trade settles down, this trend may reverse. What are FPI and Bond Yield?