Foreign Institutional Investors (FIIs) have sold more than ₹2.54 lakh crore worth of Indian equities in the secondary market during the first five months of 2026, surpassing the total outflows recorded during the entire year of 2025. The scale of selling highlights a sharp deterioration in foreign investor sentiment toward Indian equities amid a challenging global and domestic environment.

The current pace of outflows translates to roughly ₹400 crore being withdrawn every trading hour, making 2026 one of the most intense periods of foreign selling in recent history. By May itself, FIIs had already exceeded the previous year's full-year outflow figures, reflecting sustained pressure on Indian markets.

Several factors have contributed to the continued exodus. Elevated crude oil prices have raised concerns about India's import bill and current account deficit, while the depreciation of the rupee has reduced the attractiveness of rupee-denominated assets for global investors. At the same time, global funds have increasingly shifted capital toward markets and companies benefiting from the artificial intelligence boom, particularly in the United States and select Asian markets.

Market participants also point to relatively expensive valuations in Indian equities compared with other emerging markets. Despite strong domestic institutional inflows helping cushion the impact of foreign selling, global investors have continued to seek opportunities offering better earnings visibility and stronger AI-driven growth prospects.