Foreign Portfolio Investors (FPIs) have continued their significant withdrawal from Indian equities, pulling out Rs 19,837 crore in early April, as global macroeconomic headwinds, geopolitical uncertainty, and a depreciating rupee weigh heavily on market sentiment.
Key Points
- Foreign Portfolio Investors (FPIs) withdrew Rs 19,837 crore from Indian equities in the first two trading sessions of April, continuing a selling trend from March.
- The outflows are primarily driven by the West Asia conflict, escalating crude oil prices, and the weakening Indian rupee.
- The rupee's significant depreciation, approximately 4 per cent since the conflict began, further incentivises FPIs to divest their investments.
- Elevated US bond yields are making fixed-income assets more appealing, prompting a global rebalancing of investment portfolios away from equities.
- Sustained FPI selling has led to fairer valuations in the Indian market, potentially creating attractive opportunities once geopolitical tensions ease and crude oil prices decline.
Foreign investors continued to exit Indian equities, withdrawing Rs 19,837 crore ($2.1 billion) in the first two trading sessions of April, weighed down by the West Asia conflict, rising crude oil prices, and persistent rupee depreciation.
This came following a record withdrawal of Rs 1.17 lakh crore (about $12.7 billion) from domestic equities in March, making it the worst monthly outflow.
Before this, FPIs pumped in Rs 22,615 crore in February, the highest monthly inflow in 17 months.
FPI Outflows Continue in 2026
With the latest withdrawals, total Foreign Portfolio Investors (FPIs) outflow has reached Rs 1.5 lakh crore so far in 2026, according to NSDL data.
As per the data, FPIs continued to take out money in April, offloading equities worth Rs 19,837 crore in the cash market till April 2.
Factors Influencing FPI Outflows
Market participants attributed the sustained selling pressure to global macroeconomic headwinds and heightened geopolitical uncertainty.
"Continuation of the war, crude again spiking to above $100 level, the steady decline in the rupee and appreciation of the dollar triggered this record selling by FPIs," said VK Vijayakumar, Chief Investment Strategist at Geojit Investments.
Moreover, the rupee has depreciated by about 4 per cent since the war began, and fears of further depreciation have added to the weakness of the rupee, which, in turn, is triggering further selling by FPI, he added.
Additionally, elevated US bond yields have improved the relative attractiveness of fixed-income assets, prompting global investors to rebalance away from equities, said Himanshu Srivastava, Principal-Manager Research at Morningstar Investment Research India.
Market Valuations and Future Outlook
Vijayakumar said that sustained selling by the FPIs has made Indian market valuations fair and in some segments attractive, although FPI inflows can happen only when there is de-escalation on the war front, leading to a decline in crude oil prices.
