Indian Capital Markets Face Heavy FPI Outflows as Equity Sales Hit ₹2.87 Lakh Crore in 2026
Foreign Portfolio Investors (FPIs) pulled out over ₹62,853 crore from Indian equities in the first half of June 2026, driven by geopolitical tensions, a weakening Indian Rupee, and high market valuations. While equity markets faced major selling pressure, the domestic debt market remained resilient, attracting over ₹13,200 crore via the Fully Accessible Route (FAR).
Data from the National Securities Depository Limited (NSDL) reveals a steep rise in foreign capital flight from India, with Foreign Portfolio Investors (FPIs) withdrawing over ₹62,853 crore from the equity market during the first 15 days of June 2026. This latest exit pushes total net equity outflows for the year 2026 to a historic ₹2.87 lakh crore, easily eclipsing the entire 2025 calendar year outflow of ₹1.66 lakh crore. According to market analysts, this aggressive sell-off stems from a combination of global macroeconomic headwinds, pricey domestic stock valuations compared to other emerging peers, and a 6% year-to-date depreciation of the Indian Rupee (INR), which recently touched an all-time low of 95 per US Dollar. Despite the equity market bloodbath, policymakers have actively deployed relief measures, including RBI-backed currency swap expansions and a reduction in hedging costs for foreign currency non-resident (FCNR) deposits to maintain balance of payments (BoP) stability amidst a $60 billion deficit forecast. Additionally, foreign interest has shifted strategically toward safer havens; the Indian debt market saw a strong inflow of over ₹13,200 crore through the government's Fully Accessible Route (FAR) in early June alone. Looking ahead, market liquidity and foreign investor sentiment are expected to heavily hinge on key international cues, including US Federal Reserve policy outcomes, Bank of Japan interest rate decisions, and crucial geopolitical negotiations between the US and Iran.