The report said FPI investment “turned sharply negative” during 2025-26, recording total net outflows of ₹1,52,692 crore, the highest annual outflow in any financial year on record. This marked a sharp reversal from the record inflow of ₹3,39,066 crore in FY24 and the modest inflow of ₹20,018 crore in FY25.
However, the report noted that the withdrawals were relatively modest when viewed against the overall size of foreign investor holdings.
“Despite net FPI outflows of ₹1,52,692 crore during 2025-26, the flow-to-AUC ratio stood at only 2.1 per cent. This indicates that the scale of withdrawal was relatively moderate compared to the overall size of FPI holdings.”
For comparison, the ratio stood at 2.7% in FY22, while FY24 recorded a positive ratio of 7%, reflecting significantly stronger inflows relative to the existing FPI asset base.
Equity selling accelerates as debt inflows remain resilient
The annual report said foreign investors remained persistent sellers in Indian equities throughout FY26, with net equity outflows of ₹1,80,832 crore, more than 40% higher than the previous year’s equity outflows.
In contrast, the debt market continued to attract foreign money, with net inflows of ₹25,807 crore, led primarily by investments through the Fully Accessible Route (FAR) and the General Limit route. The report attributed this to continued investor interest in Indian fixed income, supported by residual passive flows linked to India’s inclusion in the JP Morgan bond index.
According to the report, equity outflows were driven by US tariff-related uncertainties, geopolitical tensions in West Asia, subdued corporate earnings due to higher input costs, and uncertainty over medium- to long-term inflation projections.Also Read: SEBI deploys AI tools as annual report finds 62% investors follow finfluencers
Selling intensified towards the end of the financial year, with March 2026 alone accounting for nearly ₹1.17 lakh crore of equity outflows. The April-June 2025 quarter was the only period during the year that recorded net FPI buying in equities, supported by RBI rate cuts and an improvement in global sentiment.
Capital goods, telecom attract inflows
Despite the broader risk-off environment, FPIs selectively increased exposure to sectors such as capital goods (₹25,923 crore), telecom (₹24,746 crore) and metals & mining (₹20,305 crore).
On the other hand, information technology recorded the highest net outflows of ₹81,239 crore, followed by financial services (₹58,066 crore), FMCG (₹33,728 crore) and healthcare (₹30,351 crore). The report said this reflected sectoral rebalancing amid evolving global growth expectations, valuation considerations and changing risk sentiment.
SEBI also noted that the number of registered FPIs rose to 12,199 as of March 31, 2026, an increase of 333 entities over the previous year. The United States remained the largest source of foreign portfolio assets, accounting for 40.7% of total assets under custody, while Ireland and France were the only two among the top ten jurisdictions to register an increase in assets during the year.
