Foreign Portfolio Investors’ (FPI) share of Indian equities has dropped to its lowest level in nearly 14 years, while domestic institutions have emerged as the larger stakeholders in the Indian stock market—a significant structural shift occurring amid another week of sustained foreign selling.
Data from the National Securities Depository Limited (NSDL) reveals that FPIs were net sellers in Indian equities for four of the five trading sessions in the week ending May 8, 2026. On May 4, they saw net equity outflows of ₹8,035.69 crore through stock exchanges. The following day saw a brief respite, with FPIs becoming net buyers, contributing ₹2,969.02 crore, marking the only instance of buying for that week. However, they resumed selling on May 6 with outflows of ₹3,399.03 crore, culminating in the most significant single-day selling of the week on May 7, amounting to ₹5,697.61 crore. By May 8, net equity outflows through exchanges slowed dramatically, narrowing to ₹69.31 crore, as gross purchases of ₹18,514.38 crore nearly matched gross sales of ₹18,583.69 crore.
In total, when combining activities through stock exchanges and primary market routes, FPI equity outflows for the week reached ₹14,207.20 crore.
FPI Holdings Decline, Domestic Institutional Investors Rise
These weekly figures contribute to a larger narrative. According to JM Financial’s monthly tracker for April 2026, FPI ownership of Indian equities has fallen to 14.7 percent, its lowest since June 2012 and down from 19.9 percent a decade earlier. In contrast, Domestic Institutional Investors now hold 18.9 percent of Indian equities, surpassing FPI holdings for the first time since December 2024 and extending that lead.
Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, provided context for this trend. He noted that FPI selling through exchanges in 2026 has totaled ₹2,18,540 crore so far, while primary market investments by FPIs have remained relatively steady at ₹12,340 crore.
N. ArunaGiri, CEO of TrustLine Holdings, highlighted that India is losing out on emerging market allocations in favor of its peers. “At a time when Korea received nearly $4 billion and Taiwan around $5.5 billion in flows, India is still not getting its fair share,” he said. This reflects a lack of attractiveness for foreign institutional investors (FIIs) regarding allocations to India. The impact of this trend is evident in the market structure, with large-cap stocks underperforming while strong domestic flows buoyed the small and mid-cap segments.
Structural Factors at Play
The reasons behind India’s decline in attractiveness appear partly structural. Vijayakumar emphasized the global technology rally as a major factor diverting flows. He remarked, “The impressive earnings growth expected in markets like South Korea and Taiwan this year, spurred by the AI boom, is attracting FPI flows into these regions significantly.” He also mentioned that currency depreciation, along with concerns about earnings growth in India, has driven FPIs away this year.
Despite the overall trend of selling, Vijayakumar pointed out that FPIs have continued to invest in sectors such as power, construction, and capital goods, showing a preference for mid-cap and selectively small-cap stocks that demonstrate high growth potential.
ArunaGiri warned that a substantial recovery for large-cap stocks would require a shift in foreign investor behavior. “As long as FIIs remain reticent in increasing their allocations to India, the market is likely to stay highly stock-specific, driven more by earnings visibility and bottom-up opportunities than by momentum rallies in large-cap stocks,” he stated.
Published on May 9, 2026
