Mumbai: Foreign investors continued their selling trend in Indian equity markets in May, withdrawing more than ₹14,000 crore amid persistent global uncertainties, rising geopolitical tensions and concerns over currency depreciation.

According to data from the National Securities Depository Limited (NSDL), Foreign Portfolio Investors (FPIs) have pulled out ₹14,231 crore from Indian equities so far this month. The latest outflow has pushed the total FPI withdrawal in 2026 beyond ₹2 lakh crore, surpassing the entire outflow recorded in 2025.

Market experts said elevated crude oil prices, a weakening rupee and better growth opportunities in other Asian markets are among the key reasons behind the sustained selling pressure by foreign investors.

FPI outflows cross last year’s total

The cumulative FPI outflow from Indian equity markets in 2026 has crossed ₹2.18 lakh crore, significantly higher than the ₹1.66 lakh crore withdrawn during the whole of 2025.

Foreign investors remained net sellers in almost every month this year except February. In January, FPIs withdrew ₹35,962 crore before briefly turning net buyers in February with investments worth ₹22,615 crore — the highest monthly inflow seen in the past 17 months.

However, the positive momentum did not sustain as concerns over global macroeconomic conditions once again triggered heavy selling.

Last week alone, Foreign Institutional Investors (FIIs) sold equities worth ₹11,070 crore, according to provisional exchange data.

Despite the persistent outflows from foreign investors, Domestic Institutional Investors (DIIs) continued to support the markets by purchasing equities worth ₹21,390 crore during the same period.

Analysts said strong domestic institutional participation has helped cushion the impact of foreign selling on benchmark indices.

Geopolitical tensions impact investor sentiment

Market analyst Pabitro Mukherjee said foreign investors initially showed positive sentiment following the results of state assembly elections, which boosted confidence in political stability at the Centre.

“FIIs started the week positively with net buying of ₹2,840 crore after the election outcome. The strong performance of the ruling party at the Centre supported market sentiment,” Mukherjee said.

However, the optimism quickly faded as geopolitical tensions intensified globally and crude oil prices turned volatile.

“Rising geopolitical tensions and volatile crude prices led FIIs to become net sellers during the remaining trading sessions of the week,” he explained.

Mukherjee added that foreign investors sold equities worth ₹13,910 crore during the latter part of the week as concerns over global risks resurfaced.

According to him, elevated oil prices and rupee weakness have remained major concerns for overseas investors over the last few months.

“FIIs have remained sellers throughout the current calendar year and have offloaded over ₹2.5 lakh crore according to provisional exchange data,” he noted.

Experts point to global market opportunities

V K Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said the trend of foreign selling has continued steadily in May.

“Through May 8, FPIs have sold equities worth ₹14,232 crore through secondary markets. This takes total FPI selling through exchanges in 2026 to ₹2,18,540 crore,” he said.

However, Vijayakumar highlighted that foreign investors are still participating selectively in Indian markets through primary investments.

“FPIs continue to invest through primary markets and have invested ₹12,340 crore so far this year,” he added.

He also pointed out that certain sectors in India continue to attract foreign interest despite the broader selling trend.

“FPIs have been investing in sectors such as power, construction and capital goods. There is also increasing interest in select mid-cap and small-cap stocks with strong growth potential,” he explained.

AI boom attracting funds to other Asian markets

Experts believe global capital is currently shifting toward markets such as South Korea and Taiwan due to expectations of stronger earnings growth linked to the artificial intelligence (AI) sector.

Vijayakumar said international investors are finding better opportunities in economies benefiting directly from the global AI expansion.

“The impressive earnings growth expected in markets like South Korea and Taiwan, supported by the AI boom, is attracting significant FPI flows,” he said.

In comparison, concerns around earnings growth in India and rupee depreciation have reduced the attractiveness of Indian equities in the short term.

Despite the sustained foreign selling, Indian benchmark indices have remained relatively resilient due to strong domestic inflows from mutual funds, insurance companies and retail investors.

Analysts believe market volatility could continue in the coming weeks depending on geopolitical developments, crude oil price movements and global central bank policy signals.