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Foreign portfolio investors have dumped Indian equities at an unprecedented pace in 2026, with total outflows reaching ₹1.92 lakh crore by early May, as global macroeconomic headwinds and high domestic valuations spark a massive risk-off sentiment.

The current exodus has already eclipsed the total ₹1.66 lakh crore withdrawn in all of 2025. Data from NSDL shows that April alone witnessed a fresh exodus of over ₹60,847 crore. Analysts point to the West Asia conflict, which escalated in late February, as a primary catalyst for the flight to safety.

Why The Exit? 

The selling pressure is fueled by global and local factors:

• US Bond Yields: The 10-year US Treasury yield, hovering above 4.5%, has made emerging market equities less attractive.
• Dollar Strength: A weakening Rupee, which hit record lows in early 2026, has eaten into dollar-denominated returns for foreign funds.
• Valuation Mismatch: Foreign investors have grown cautious as corporate earnings growth slowed, failing to justify India's premium stock valuations.

DII

Despite the heavy foreign selling, the Indian indices have avoided a total collapse. Domestic Institutional Investors (DIIs), powered by steady SIP inflows from retail investors, have absorbed nearly 90% of the FII selling pressure. Year-to-date, DIIs have pumped in approximately ₹1.7 lakh crore, providing a sturdy floor for the benchmark Nifty and Sensex.