Foreign Portfolio Investors (FPIs) continued their selling trend in Indian equities during May, registering net outflows of ₹32,963 crore, according to data from the National Securities Depository Limited (NSDL). This marks the third consecutive month in 2026 that foreign investors have been net sellers in the Indian equity market.
The sustained selling by foreign investors has been largely attributed to ongoing tensions in West Asia, which have led Brent crude oil prices to surpass the $100 per barrel mark, raising concerns about India’s import bill and inflation outlook. Recently, although crude oil prices have dipped below the $100 threshold, they remain elevated compared to pre-escalation levels, which has negatively impacted investor sentiment as India relies significantly on energy imports from the Middle East.
Crude Oil Concerns and AI-Driven Global Flows
Market analysts suggest that a significant share of global investment flows is currently favoring regions aligned with the artificial intelligence-driven investment cycle, while India is not perceived as a leading destination for AI-focused investments. According to NSDL statistics, FPIs sold equities worth ₹60,847 crore in April and recorded net selling of ₹1,17,775 crore in March, which stands as the highest monthly outflow recorded this year. In contrast, February saw net inflows of ₹22,615 crore, following net sales of ₹35,962 crore in January.
So far in 2026, foreign investors have withdrawn a total of ₹2,24,932 crore from Indian equities.
Market Experts See Mixed Signals
VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, commented on current market trends: “An important recent trend in the market is buy on dips and sell on rallies. Low openings are being bought into, while high openings are experiencing selling. Institutional activity must be contributing to this trend, and retail traders need to navigate it carefully.” He noted improvements in some market indicators.
“Brent crude declining below $105 and the rupee appreciating to 96.20 from 96.96 are positive developments,” Vijayakumar added.
Small and Midcaps Remain Resilient
Vijayakumar further stated that broader markets are still active despite the pressure on large-cap stocks. “There is brisk activity in the broader market, with small and midcaps that report strong results and optimistic growth projections receiving a positive response,” he said. He also remarked, “FII selling and fears of further selling are affecting large caps despite their relatively cheaper valuations. The momentum is with small and midcaps, even though safety lies with large caps. This dichotomy will likely persist until FIIs begin buying in India.”
Published on May 30, 2026
