Analysts noted that as long as the artificial intelligence (AI) trade persists, the trend of foreign portfolio investors (FPIs) pulling out of India is expected to continue. This year, a notable trend in FPI flows shows that Japan, South Korea, and Taiwan are attracting substantial inflows, while India and other emerging markets are experiencing outflows due to challenges from the energy crisis and currency devaluation. Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, highlighted that the AI trade, particularly in South Korea and Taiwan, plays a crucial role in driving capital flows.
FPIs were net sellers in the market for Rs 63,167 crore in April, with investments of Rs 2,319 crore in the primary market, resulting in net FPI outflows of Rs 60,848 crore. The total FPI outflows from India in 2026 have reached Rs 191,968 crores so far. Notably, companies like Samsung and SK Hynix in South Korea, and TSMC in Taiwan, are attracting a significant portion of these inflows, as per analysts’ observations. Vijayakumar pointed out that the strong performance of these companies is underpinning the FPI flows into these markets, with concerns over AI stock overvaluations.
In contrast, Foreign Institutional Investors (FIIs) remained net sellers for the 10th consecutive month in April. On the domestic front, Domestic Institutional Investors (DIIs) emerged as net buyers in the last month, injecting Rs 51,000 crore into the market. DIIs are playing a crucial role in absorbing a substantial part of the selling pressure, thereby preventing more significant market declines. Last week, a surge in crude oil prices was witnessed following reports that President Donald Trump had instructed officials to prepare for a prolonged blockade of Iranian ports.
Indian equity benchmarks closed in the negative territory last week due to persistent selling by FIIs and the impact of higher crude prices on market sentiment. Analysts anticipate that institutional activity will be mainly influenced by global news developments moving forward. Additionally, the outcome of the state assembly election on Monday is expected to have repercussions on the Indian equity market in the upcoming week.
