Foreign portfolio investors continued heavy selling in May 2026, withdrawing nearly ₹27,000 crore from Indian equities. This pushed total outflows in the first five months of the year to ₹2.2 lakh crore, the highest ever recorded. The rupee slipped past 96 against the US dollar, reflecting pressure from global factors and investor caution.
Data shows January saw net outflows of ₹35,962 crore, while February was the only positive month with inflows of ₹22,615 crore. March witnessed record withdrawals of ₹1.17 lakh crore, followed by ₹60,847 crore in April. The May trend has already crossed ₹27,000 crore, adding to the strain on domestic markets.
Analysts point to global uncertainty, rising crude oil prices, and strong US bond yields as key reasons for the selling. The dollar’s strength has made safer assets more attractive, while the global rush toward artificial intelligence investments has diverted funds away from India.
The rupee, which began the year at 90 per dollar, weakened sharply to 96.14 by mid‑May. Experts warn that continued FPI selling and high oil prices could push the currency lower.
Market strategists believe the current account deficit and inflation risks are adding to investor concerns. Some also suggest that once the AI investment bubble cools, flows may return to emerging markets like India.
