Mumbai (Maharashtra)
Foreign Portfolio Investors (FPIs) continued their selling streak in Indian equities in May, with net outflows amounting to Rs 32,963 crore during the month, according to data shared by the National Securities Depository Limited (NSDL).
May marked the third consecutive month in 2026 in which foreign investors remained net sellers in the Indian equity market.
The continued selling by overseas investors has largely been attributed to the ongoing tensions in West Asia, which pushed Brent crude oil prices above the USD 100 per barrel mark and raised concerns about India's import bill and inflation outlook.
Although crude oil prices have declined below USD 100 per barrel this week, they remain elevated compared to levels seen before the geopolitical tensions escalated. As India imports a large share of its energy requirements from the Middle East, higher crude prices have weighed on investor sentiment.
Market participants also believe that a significant portion of global investment flows is currently moving towards regions benefiting from the artificial intelligence-driven investment cycle, while India is not being viewed as a major AI-focused market destination.
According to the NSDL data, FPIs had sold equities worth Rs 60,847 crore in April. In March, net selling stood at Rs 1,17,775 crore, making it the highest monthly outflow recorded so far this year.
In contrast, February witnessed net inflows of Rs 22,615 crore. Prior to that, FPIs had sold equities worth Rs 35,962 crore in January.
Overall, foreign investors have pulled out a net Rs 2,24,932 crore from Indian equities so far in 2026.
Commenting on recent market trends, VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said, "An important recent trend in the market is buy on dips and sell on rallies. Low openings are bought into and high openings are getting sold. Institutional activity must be playing a role in this. Retail traders have to handle this trend very deftly."
He noted that some market indicators have started improving.
"Brent crude declining to below USD 105 and rupee appreciating to 96.20 from 96.96 level are positive developments," Vijayakumar said.
He added that broader markets continue to remain active despite the selling pressure in large-cap stocks.
"Brisk activity is happening in the broader market. Small and midcaps coming out with good results and optimistic growth projections are getting positive response from the market," he said.
READ MORE: Hazrat Hajar's sacrifice is part of Eid al-Adha's fable
He further added "FII selling and fears of more FII selling are weighing on largecaps despite their relatively cheaper valuations. Momentum is in SMIDs even though safety is in largecaps. This dichotomy will persist till FIIs turn buyers in India".
