Foreign investors pull $56 bn from Indian stocks, erasing a decade of net inflows

Motilal Oswal Financial Services reported that foreign institutional investors have pulled $56 billion from Indian equities in the past two calendar years, offsetting all net inflows recorded since 2019 and reducing the decade-long cumulative position to almost zero. FIIs sold $25.6 billion in CY2026 alone, with purchases confined to February, July and August, while previous years saw large outflows of $18.8 billion in CY2025 and $0.8 billion in CY2024.

The retreat follows the September 2024 market peak, concerns over lofty valuations, a US tariff dispute that pressured the rupee, and persistent high oil prices. Equinomics Research’s G Chokkalingam noted that FIIs are now favoring primary over secondary markets and that continued oil price pressure could keep them as net sellers, likely weighing on benchmark indices. Meanwhile, domestic institutional investors injected a record $177 billion over the same period, 23 % above their prior eight-year total, supported by robust retail SIP contributions that have cushioned the market. The outlook hinges on oil price movements, with a drop below $100 a barrel seen as a prerequisite for a shift in FII sentiment.