The Indian equity market has witnessed a significant exodus of foreign capital during the first fortnight of June 2026. According to the latest data from the National Securities Depository Limited (NSDL), Foreign Portfolio Investors (FPIs) have offloaded shares worth 62,853 crore in just the first two weeks of the month. This aggressive selling spree is attributed to a combination of escalating geopolitical tensions, persistent concerns regarding global economic growth, and the continuous depreciation of the Indian rupee against the US dollar.
Record-Breaking Outflows in 2026
87 lakh crore. 66 lakh crore recorded throughout the entire year of 2025. The data highlights a growing cautiousness among international investors towards emerging markets like India amidst global volatility.
Monthly Trends and Market Sentiment
An analysis of the monthly data for 2026 reveals a consistent trend of selling by foreign investors, with February being the only exception. In January, FPIs withdrew 35,962 crore from the market. However, February saw a brief reversal as investors infused 22,615 crore, marking the highest monthly investment in 17 months. 17 lakh crore. The trend continued through April and May, with withdrawals of 60,847 crore and 32,963 crore, respectively. The first two weeks of June have already seen a massive exit of 62,853 crore, indicating that the selling pressure remains intense.
Expert Perspectives on Global Factors
Pabitro Mukherjee, Deputy Vice President of Research at Bajaj Broking, noted that the trajectory of FPI flows in the coming weeks will be heavily influenced by several international developments. These include the progress of US-Iran peace negotiations, the interest rate decisions by the US Federal Open Market Committee, the monetary policy stance of the Bank of Japan, and commentary from other major global central banks. Himanshu Srivastava, Principal Manager of Research at Morningstar Investment Research India, added that investors are operating in an environment characterized by uncertainty regarding interest rates and geopolitical events. He explained that during such times, investors often adopt a risk-off approach, moving capital away from emerging markets toward developed markets or safer asset classes.
Government and RBI Interventions
Despite the equity sell-off, there are positive indicators for India's economic framework. The Balance of Payments (BoP) deficit for FY27 is estimated to be around 60 billion dollars. Recognizing the importance of foreign capital in supporting the current account and BoP, the Indian government and the Reserve Bank of India (RBI) have implemented several measures to attract and retain foreign investment. These initiatives include the RBI bearing the hedging costs for FCNR deposits raised by banks, the expansion of the foreign exchange swap window, and enhancing investment facilities in government bonds through the Fully Accessible Route (FAR). Also, investment limits for Non-Resident Indian (NRI) and Overseas Citizen of India (OCI) investors in domestic equities have been increased.
Resilience in the Debt Market
While the equity segment faced heavy selling, the debt market presented a different story. In the first fortnight of June, foreign investors remained net buyers in debt securities, investing over 13,200 crore through the FAR route. This brings the total investment through this specific route in 2026 to approximately 28,000 crore. This divergence suggests that while equity investors are wary of market volatility, debt instruments continue to attract capital due to structural reforms and inclusion in global bond indices.