Foreign Portfolio Investors Withdraw from India: June Sees Equity Outflows of Rs 49,340 Crore
Foreign investors withdrew Rs 49,340 crore (approximately $5.16 billion) from Indian equities in June, continuing a trend of outflows that has persisted throughout 2026. This latest sell-off has brought cumulative Foreign Portfolio Investor (FPI) outflows to Rs 2.7 lakh crore this year, surpassing the total of Rs 1.66 lakh crore withdrawn in all of 2025, according to data from the Central Depository Services (India) Ltd.
The trend shows that overseas investors have predominantly sold off equities in 2026, with the exception of February. After a significant outflow of Rs 35,962 crore in January, FPIs briefly returned in February with inflows of Rs 22,615 crore, marking the strongest monthly inflow in 17 months. However, this recovery was short-lived. March saw a record sell-off of Rs 1.17 lakh crore, followed by outflows of Rs 60,847 crore in April, Rs 32,963 crore in May, and the recent Rs 49,340 crore in June.
Himanshu Srivastava, Principal, Manager Research at Morningstar Investment Research India, attributed the June outflow to global risk aversion, a preference for developed markets, higher US yields, and valuation concerns regarding Indian equities. He noted that while market conditions improved in the latter half of June due to positive developments in the US-Iran peace deal, the easing of geopolitical tensions came too late to offset the significant withdrawals earlier in the month.
V K Vijayakumar, Chief Investment Strategist at Geojit Investments, pointed out that the moderation in FPI activity was influenced by the stabilization and appreciation of the rupee against the dollar, along with profit-booking by FPIs amid high volatility in South Korean and Taiwanese markets.
In response to the ongoing foreign outflows, Indian policymakers introduced measures in June to attract overseas investment. These included the Reserve Bank of India absorbing hedging costs on Foreign Currency Non-Resident (FCNR) deposits, expanding the forex swap window, and widening access to government securities through the Fully Accessible Route (FAR). Additionally, investment limits for non-resident Indians and overseas citizens of India in domestic equities were increased.
Despite the continued selling in equities, foreign investors were active buyers in the debt market, investing Rs 21,652 crore in debt securities through the FAR route and an additional Rs 3,246 crore through the voluntary retention route in June.
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