The trend of foreign portfolio investor (FPI) outflows persists in May, with equity sales amounting to Rs 14,232 crore in the Indian secondary markets up to May 8. In 2026, FPIs have sold a total of Rs 218,540 crore through exchanges. Despite being net sellers, FPIs are showing interest in sectors like power, construction, and capital goods.
Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, noted that FPIs are inclined towards mid and small-cap stocks with high-growth potential. Currency depreciation and concerns over India’s earnings growth are key factors driving FPI outflows. The AI boom in markets like South Korea and Taiwan is attracting FPI flows due to expected impressive earnings growth.
Foreign investors reacted positively to the state assembly election results at the beginning of the week. However, geopolitical tensions and volatile crude prices turned them into net sellers for the rest of the week. Pabitro Mukherjee, Associate Vice President-Research at Bajaj Broking, highlighted that geopolitical tensions, high oil prices, and a weaker rupee have led to selling by FIIs in recent months.
Nifty experienced high volatility last week, closing higher for the second consecutive week with a 0.7% increase. The index started positively but faced selling pressure at higher levels due to geopolitical tensions and profit booking. Going forward, institutional activity in the Indian markets is expected to be influenced by global developments, particularly US–Iran negotiations.
