FPI’s stake in Indian equities hits 14-year low

Foreign portfolio investors’ (FPIs) share in Indian equities has fallen to a nearly 14-year low, even as domestic institutions have quietly emerged as the market’s largest stakeholder — a structural shift unfolding alongside another week of sustained foreign selling.

As per NSDL data, FPIs were net sellers in Indian equities in four of the five trading sessions during the week ended May 8.

On Monday, they pulled out ₹8,035.69 crore through stock exchanges. Tuesday (May 5, 2026) offered a brief respite, with FPIs turning net buyers worth ₹2,969.02 crore. Selling resumed on Wednesday (May 6, 2026) with outflows of ₹3,399.03 crore, followed by the week’s steepest single-day sell-off on Thursday (May 7, 202) at ₹5,697.61 crore. By Friday (May 8, 2026) selling had nearly tapered off, with net outflows narrowing sharply to ₹69.31 crore, as gross purchases of ₹18,514.38 crore almost matched gross sales of ₹18,583.69 crore. On an aggregate basis — combining stock exchange and primary market flows — FPI equity outflows for the week stood at ₹14,207.20 crore. The weekly trend reflects a broader structural shift.

According to JM Financial’s monthly tracker for April 2026, FPI ownership in Indian equities has dropped to 14.7% — the lowest since June 2012 — from 19.9% a decade ago. In contrast, Domestic Institutional Investors (DIIs) now hold 18.9% of Indian equities, overtaking FPIs for the first time since December 2024 and steadily widening the gap. V K Vijayakumar, Chief Investment Strategist at Geojit Investments Ltd., said, “This takes the total FPI sell figure through exchanges in 2026, so far, to ₹2,18,540 crore,” he said, while noting that primary market investment by FPIs has remained resilient, with “total investment of ₹12,340 crore, so far, this year.” N. ArunaGiri, CEO of TrustLine Holdings, said, “At a time when Korea received nearly $4 billion and Taiwan around $5.5 billion in flows, India is still not getting its due share of emerging market allocations. This clearly indicates that FIIs currently do not find India as attractive from an allocation perspective,” he said.

The impact, he added, is visible in market behaviour. “Large caps have relatively underperformed, while strong domestic flows have continued to support the SMID segment.” Analysts said India’s underperformance in attracting foreign flows is partly structural.

(The writer is with The Hindu businessline)

Analysts say India’s underperformance in attracting foreign flows is partly structural