MUMBAI: Net outflow by foreign portfolio investors (FPIs) from the stock market for the current year crossed the Rs 2-lakh-crore mark for the first time ever. This also showed up in aggregate foreign holding in Indian stocks falling to a 14-year low at 14.7%, a level much below the comparative data for domestic institutions, which is at 18.9%, a report by JM Financial showed.So far in a little over four months till May 8, FPIs have net taken out nearly Rs 2.1 lakh crore from India, making it the worst yearly number since 1993, the year these fund managers were allowed to invest in domestic stocks, data from Sebi and NSDL showed. More than half of this was in March alone, soon after the war in West Asia started and the rupee crashed to below the 95/$ level, then the lowest level ever against the greenback. In April, the selling slowed to Rs 60,847 crore. In whole of 2025, the total outflow from stocks was Rs 1.7 lakh crore.
A report by Goldman Sachs said that although the intensity of FPI selling has slowed, it’ll be some time before foreign funds start buying again into Indian stocks.“The bulk of foreign selling is likely over, after record outflows over the recent months,” the report said. “Various approaches using flows, positioning and ownership trends suggest foreign flows are now close to downside scenarios.” Analysts at the US-based global financial major estimated that the downside risk of incremental foreign selling could be limited at about $4-5 billion, translating to nearly Rs 50,000 crore at the upper end of the band.On the other hand, the report noted that while the bulk of foreign selling is likely over, “foreign re-buying may still be impeded in the near term, for a few reasons.”For one, empirical evidence suggests foreign funds won’t immediately return to buy in India when oil prices fall. “Foreign capital did not return to Indian equities in the early-April oil correction, despite the significant sell-off during the preceding oil rally in March. “Past evidence shows that foreign flows tend to be modestly positively correlated with falling oil prices in the short-term.”Secondly, earnings revisions have become an increasingly important variable guiding foreign flows in Indian equities. While much of foreign selling may have already occurred in anticipation of the forthcoming downgrade cycle, low visibility around a recovery will likely limit foreign re-buying in the near-term, it said.And lastly, “compared to north Asian markets, India offers a less attractive risk-reward as it trades at significantly higher growth-adjusted valuations, on top of the ongoing investor concerns over the potential adverse impact of AI,” the report said.