FPIs have pulled Rs 2.42 lakh crore out of Indian markets in 2026, yet their holdings have barely moved. Behind the headline outflow is a steady rotation from shares to bonds.
Foreign portfolio investors (FPIs) were net sellers in six of the first ten months of 2026. Up to 27 October, they withdrew a net Rs 2,42,190 crore, according to data available on NSDL. Equity accounted for all of it and more: FPIs sold a net Rs 3,07,050 crore of shares, while debt drew in Rs 60,959 crore.
The selling has dented foreign ownership, but not dismantled it. FPI assets under custody (AUC) stood at Rs 73.67 lakh crore in September 2026, only 0.8% below the Rs 74.30 lakh crore of January 2025. Equity still makes up nearly 90% of that total. What has changed is the mix of assets, who owns them and where new money is going.
Funds and pension money still dominate
Appropriately Regulated Funds, the broad category of regulated investment funds, are the backbone of the market. Their 7,114 entities hold Rs 40.27 lakh crore, 55% of the total, and grew their asset under management grew 2.8% between January 2025 and September 2026.
Pension funds were the standout buyers. Their holdings rose 17.4% to Rs 7.34 lakh crore, a gain of Rs 1.09 lakh crore that matched the far larger fund category. Banks’ AUMs grew +22% while AUC of investment managers rose +25%.
Sovereign or Government-linked money pared their holdings during the same time. Entities owned or controlled by governments reduced their holdings by Rs 1.30 lakh crore or 25%, sovereign wealth funds reduced their AUMs by Rs 37,459 crore and central banks by Rs 34,051 crore. These investors are few but very large — the 99 sovereign funds average Rs 4,764 crore each — so their retreat weighs heavily on the totals.
This follows as sovereign and foreign funds reduce exposure to equity and park money in Gold and high yielding debt.
One country dominates foreign ownership. Investors based in the US hold Rs 30.44 lakh crore, or 41.3% of all FPI assets and almost six times as much as second-placed Singapore. The top ten jurisdictions together account for 82.9%. Once gateway for FPIs, Mauritius is much lower in the jurisdiction through which foreign investors route money. Mauritius is fifth destination ranked for foreign flows, and is the most diversified, and holds 56% of all FPI investment in Indian mutual funds.
Behind the US, the ranking is crowded. Singapore, Luxembourg and Ireland each hold around 7%, though Luxembourg and Ireland are largely fund domiciles that pool money from elsewhere.
The jurisdiction profiles differ sharply as well. Almost a quarter of Singapore-based holdings sit in debt, against 9% for FPIs overall. Norway, home to one of the world’s largest sovereign funds, holds 99.3% of its Rs 2.58 lakh crore in equity.
The monthly data show selling that came in waves rather than a steady drip even as the benchmark Nifty 50 declined 4% since January 2025.
Debt tells a different story. June was the strongest month for bonds: Rs 55,518 crore of net debt buying more than offset Rs 49,340 crore of equity sales. For the year, debt via General Limit route drew Rs 54,144 crore and via the Fully Accessible Route (FAR) Rs 25,002 crore, while the Voluntary Retention Route (VRR) lost Rs 18,187 crore. This follows relaxation in tax rules for FPIs in the debt market.
Mutual fund units drew a net Rs 10,404 crore, nearly all of it in a single October burst of Rs 9,710 crore into equity schemes.
Asset holdings data confirm the rotation to debt. Between January 2025 and September 2026, FPI equity holdings fell 2.3% to Rs 66.17 lakh crore, while debt holdings rose 15.5% to Rs 6.78 lakh crore.
The growth is concentrated in government-backed instruments. FAR holdings, which give foreign investors unrestricted access to designated government bonds, jumped 32.7% to Rs 3.25 lakh crore. General Limit debt rose 13.5%. VRR holdings, which make up 36% of foreign banks’ and 32% of corporate FPIs’ assets, shrank 7.7%. Mutual fund holdings, still small at Rs 14,034 crore, grew 30%.
For India’s markets, the picture is mixed. Foreign investors have not abandoned the country — their total AUM is almost unchanged — but they are trimming equity exposure and parking more money in sovereign debt. Whether those reverses will depend on the pace of equity selling in the last two months of the year, and on whether government-linked investors return.