FPIs pull out ₹43,000cr from Indian equities in June
What's the story
Foreign portfolio investors (FPIs) have withdrawn nearly ₹43,000 crore from Indian equities in the first week of June. This comes as a result of a global capital shift toward technology and artificial intelligence (AI)-linked opportunities abroad, as well as continued rupee weakness. The total FPI outflows from Indian equities have now reached ₹2.67 lakh crore in 2026, surpassing last year's total of ₹1.66 lakh crore.
Market trends
Global investors reallocating capital toward tech, AI opportunities
Market experts attribute the FPI withdrawal to weak earnings growth, rupee depreciation, and attractive global investment opportunities in technology and AI. Alpha AMC Founder Rajesh Singla said global investors are reallocating capital toward major tech and AI-related public market opportunities emerging globally. He added that the upcoming SpaceX IPO and expected capital market activity around leading AI companies are attracting significant global liquidity, leading to temporary capital rotation away from emerging markets like India.
Investment shifts
Record FPI outflows in 2026
FPIs have been net sellers in all months of 2026 except February, when they were net buyers. They withdrew ₹35,962 crore in January before turning net buyers with an inflow of ₹22,615 crore in February, the highest monthly inflow in 17 months. However, the trend sharply reversed in March with a record withdrawal of ₹1.17 lakh crore by foreign investors. The selling continued with net outflows of ₹60,847 crore and withdrawals worth ₹32,963 crore respectively for April and May.
Policy response
Rupee depreciation and measures to attract overseas capital
The Indian rupee has depreciated nearly 6% in 2026 and around 10% over the last year, falling from mid-80s to about 95.5 against the US dollar despite RBI's efforts. Policymakers have announced measures to attract overseas capital, including exempting interest and capital gains on FPI investments in government securities from taxation. Geojit Investments Chief Investment Strategist V K Vijayakumar said these steps could support fresh foreign inflows into Indian equities.
Investment influence
AI trade losing momentum?
Vijayakumar also noted that a sustained revival in FPI inflows would depend on a moderation in the global AI-driven investment theme. He said early signs of this happening are visible, with the sharp decline in Nasdaq on June 5 indicating that the AI trade may be losing momentum. If this rally cools and reverses, it could trigger a reversal in FPI outflows from India.