India FPI Outflows Continue in May

Foreign Portfolio Investors (FPIs) continued their selling streak in India's equity market, withdrawing Rs 32,963 crore in May 2026. This brings the total outflow for 2026 to Rs 2.25 lakh crore, surpassing the Rs 1.66 lakh crore pulled out in all of 2025. Key reasons for these outflows include subdued earnings growth in India, the depreciation of the India — Indian rupee (weakening by nearly 6% in 2026), and more attractive investment opportunities in markets like the United States, Japan, South Korea, and Taiwan, particularly those experiencing AI-led rallies. Rising Brent Crude prices, exacerbated by disruptions around the Strait of Hormuz, have also increased India's import bill and current account deficit, further pressuring the India — Indian rupee. Despite efforts by the State Bank of India to defend the currency, the India — Indian rupee's weakness directly impacts dollar-denominated returns for foreign investors. While the pace of selling moderated in May, analysts like Sachin Jasuja of Centricity WealthTech and S. R. Vijayakumar of Geojit Financial Services suggest a reversal in FPI flows is unlikely without significant macroeconomic improvements. Himanshu Srivastava of Morningstar DBRS noted a gradual improvement in global risk sentiment, which might be contributing to the moderated outflows.