NEW DELHI, February 3, 2026 — Foreign investors are pulling back from Indian stocks, but not as dramatically as last year. Outflows totaled $16.7 billion (₹1.5 lakh crore) in the first 10 months of the current fiscal year, significantly less than the $23.5 billion (₹2 lakh crore) seen in the same period a year earlier.
FPIs Slow the Sell-Off, But Primary Market Interest Wanes
A mixed bag for Indian equities as foreign portfolio investors adjust their strategies.
- Foreign portfolio investor (FPI) outflows are down year-over-year, despite continued selling.
- A record $13.6 billion outflow occurred in October 2024, but was offset by earlier investments.
- Investment in initial public offerings (IPOs) and qualified institutional placements (QIPs) has slowed.
- Domestic mutual funds continue to provide strong support to the Indian equity market.
The shift comes after a record monthly outflow of $13.6 billion in October 2024. However, foreign investors began the fiscal year with a more optimistic outlook, investing $3.5 billion in the first quarter, a stark contrast to the outflows experienced during the same period last year.
What’s driving the change in foreign investor behavior? While secondary market selling has eased, their appetite for new offerings is cooling. FPIs invested $7.2 billion in IPOs and qualified institutional placements (QIPs) in the first 10 months of the fiscal year, less than half the $13.3 billion invested during the same timeframe last year. This suggests a growing hesitancy amid relatively high valuations and potentially more attractive opportunities in other emerging markets.
The total net outflow from FPIs, including both primary and secondary markets, reached $9.5 billion in the 10 months leading up to January 2026, a decrease from the $10.2 billion outflow recorded year-over-year.
January saw continued selling pressure, with FPIs recording a nearly $4 billion outflow—marking the third consecutive month of net selling. They’ve been net sellers in six out of the ten months of the current fiscal year.
Fortunately, domestic mutual funds are stepping up to fill the gap. They’ve consistently poured funds into equities, investing ₹43,973.7 crore by January 29th. These funds have remained net buyers in each of the first 10 months of the fiscal year, with a total net investment of ₹4.2 lakh crore—comparable to the ₹4.1 lakh crore invested in the same period last year.
Quick fact: Domestic mutual funds have consistently offset FPI outflows, demonstrating strong confidence in the Indian equity market.
