Foreign investors pull out ₹33,000cr from Indian equities in May
What's the story
Foreign Portfolio Investors (FPIs) continued their selling spree in Indian equities throughout May 2026, with net outflows of ₹32,963 crore. This is the third consecutive month this year that foreign investors have been net sellers in the Indian equity market. The trend has largely been attributed to geopolitical tensions in West Asia and rising crude oil prices.
Market impact
Rising crude oil prices impact investor sentiment
The ongoing geopolitical tensions in West Asia have pushed Brent crude oil prices above the $100-per-barrel mark. This has raised concerns over India's import bill and inflation outlook. Although crude oil prices have come down below $100 per barrel this week, they are still higher than pre-geopolitical tension levels. As India imports a major chunk of its energy requirements from the Middle East, higher crude prices have impacted investor sentiment negatively.
Reduced outflow
Slower outflows in May compared to previous months
FPIs sold Indian shares worth around $3.45 billion in May, extending the capital outflow trend but at a slower pace than the previous two months. This is significantly lower than the $12.72 billion and $6.47 billion worth of Indian stocks they had dumped in March and April, respectively. The slowdown is attributed to investors getting used to constant news flow from West Asia and focusing more on corporate earnings now.
Market response
Hopes for peace deal buoy market performance
In the first half of May, FPIs dumped Indian equities worth $2.85 billion through exchanges. This was lower than the second half's dump of around $928.1 million worth of shares. The slowdown in foreign outflows coincided with increased hopes for a peace deal in West Asia over the past week, buoying market performance despite geopolitical uncertainties.
Sector performance
Sector-wise FPI inflows and outflows in May
The financial services sector witnessed the biggest sell-off by FIIs in the first half of May, with stocks worth $1.87 billion sold off. This was followed by a sell-off of $718 million in the oil and consumable fuel sector and $265 million in telecom stocks. In contrast, sectors such as services ($732 million), capital goods ($276 million), and metals and mining ($177 million) saw maximum FPI inflows during this period.