Foreign investors continued to exit Indian equities for yet another month, with June witnessing withdrawals of Rs 49,340 crore $5.16 billion), as global and domestic factors continued to weigh on investment sentiment.The latest sell-off has pushed cumulative Foreign Portfolio Investor (FPI) outflows from Dalal Street to Rs 2.7 lakh crore in 2026 so far, according to data from the Central Depository Services (India) Ltd. The amount has already crossed the Rs 1.66 lakh crore withdrawn during the entire 2025 calendar year.A month-wise trend shows that overseas investors have stayed on the selling side throughout 2026, barring February. After pulling out Rs 35,962 crore in January, FPIs briefly returned as buyers in February with investments of Rs 22,615 crore, the strongest monthly inflow seen in 17 months. However, that recovery did not last.March recorded the sharpest reversal, with foreign investors offloading equities worth a record Rs 1.17 lakh crore. The selling continued in April with net outflows of Rs 60,847 crore, followed by Rs 32,963 crore in May and another Rs 49,340 crore in June.Explaining the June trend, Himanshu Srivastava, Principal, Manager Research, Morningstar Investment Research India, said the outflow during the month was largely driven by “global risk aversion in the first half of June, continued preference for developed markets, higher US yields, and valuation concerns around Indian equities”.He noted that market conditions improved in the latter half of the month after positive developments around the peace deal between the US and Iran. The easing of geopolitical tensions helped calm global markets and brought down crude oil prices, reducing worries over energy-price shocks. As a result, the intensity of FPI selling slowed, although the improvement came too late to offset the sizeable withdrawals made earlier in June.V K Vijayakumar, chief investment Strategist at Geojit Investments, said the moderation in FPI activity was driven by stabilisation and appreciation of the rupee against the dollar, along with heavy FPI profit-booking amid high volatility in the South Korean and Taiwanese markets.Against the backdrop of sustained foreign outflows, policymakers unveiled a series of steps in June to encourage overseas investment. The measures included the RBI absorbing hedging costs on FCNR deposits mobilised by commercial banks, expanding the forex swap window, widening access to government securities through the Fully Accessible Route (FAR), and increasing investment limits for non-resident Indians and overseas citizens of India in domestic equities.Despite continued selling in equities, foreign investors remained buyers in the debt market. During June, FPIs invested Rs 21,652 crore in debt securities through the FAR route and another Rs 3,246 crore through the voluntary retention route.
