Foreign investors continued their significant sell-off in Indian equities, withdrawing ₹60,847 crore (approximately $6.5 billion) in April. This trend is primarily attributed to escalating geopolitical tensions and uncertainties in the global macroeconomic landscape, which have dampened risk appetite among investors.
With the latest withdrawals, total outflows by Foreign Portfolio Investors (FPIs) in the first four months of 2026 have reached ₹1.92 lakh crore, surpassing the ₹1.66 lakh crore outflow recorded for the entire calendar year of 2025, according to data from the National Securities Depository Limited (NSDL). FPIs have maintained a net selling position in every month of 2026, except for February, which saw an inflow of ₹22,615 crore, marking the highest monthly inflow in 17 months.
The trend reversed sharply in March, with a record outflow of ₹1.17 lakh crore, followed by the withdrawal of ₹60,847 crore in April. Market analysts attribute the ongoing selling pressure to a combination of global macroeconomic challenges and heightened geopolitical risks.
Himanshu Srivastava, Principal Manager Research at Morningstar Investment Research India, noted that April began with substantial selling fueled by escalating tensions in the Middle East, which drove crude oil prices higher and reignited concerns regarding global inflation. This environment led to diminished expectations of short-term rate cuts, resulting in sustained elevated global bond yields that negatively impacted investor sentiment towards emerging markets, including India.
Vaqar Javed Khan, Senior Analyst at Angel One, described the outflow in April as a “textbook risk-off reaction” to increasing tensions between the U.S. and Iran. Khan pointed out that crude oil prices exceeding $100 per barrel, a weakening rupee nearing ₹92 against the U.S. dollar, and the resurgence of inflation and concerns over the current account deficit have rendered India’s relatively high Nifty valuation—around 21 times price-to-earnings—appear costly amid the prevailing global uncertainty.
Khan suggested that if a ceasefire holds between Iran and the U.S. and WTI crude prices fall below $90 per barrel, there could be a stabilizing effect on flows, with selective FPI inflows supported by robust domestic institutional investor (DII) purchases, which have totaled approximately ₹1.7 lakh crore year-to-date. Additionally, a projected Nifty earnings growth of 16% CAGR between FY26 and FY28 could bolster confidence.
However, he cautioned that while domestic inflows may offer some respite, various factors, such as tensions surrounding the Strait of Hormuz or a rise in U.S. 10-year bond yields above 4.5%, could trigger renewed selling pressure among investors.
Published on May 1, 2026.
