FPI Outflows Hit Record ₹3 Lakh Crore In 2026 As US Bond Yields, AI Rally Trigger Foreign Selling

Foreign portfolio investors (FPIs) have withdrawn a record ₹3.08 lakh crore from Indian equities in 2026 through Oct 12, nearly twice the ₹1.66 lakh crore outflow recorded during 2025.

According to National Securities Depository Limited (NSDL) data cited in a report by Business Standard, overseas investors sold shares worth ₹3.64 lakh crore in the secondary market, while investing ₹56,485 crore in primary market offerings.

The withdrawals have intensified amid rising US Treasury yields, elevated crude oil prices and growing global interest in artificial intelligence (AI) and semiconductor stocks.

Selling Intensifies As US Bond Yields Cross 5.2%

Foreign investors withdrew ₹35,861 crore in September, followed by another ₹47,417 crore during the first 12 days of October.

Experts have attributed the outflows partly to global investors shifting towards AI-related opportunities in the US, Taiwan and South Korea.

India's limited exposure to these sectors had made domestic equities a source of funds for investments elsewhere. A weakening rupee, expensive valuations and concerns about corporate earnings have added to the pressure.

Domestic institutional investors (DIIs) have provided support, purchasing equities worth ₹6.83 lakh crore in 2026. Their net investments totalled ₹5.26 lakh crore in 2024 and ₹7.88 lakh crore in 2025.

Future Outlook

As per market analysts, US 10-year Treasury yields exceeding 5.2% had made American bonds increasingly attractive compared with emerging-market equities.

Meanwhile, Brent crude approaching $100 per barrel has raised concerns about India's economic outlook.

Measures such as stabilisation of the rupee, easing crude prices, a narrower current account deficit and stronger corporate earnings are needed to attract foreign capital.