Foreign investors dump shares worth over ₹1 lakh crore so far this month; here is why FIIs are selling

The foreign institutional investors (FIIs) have been relentlessly selling shares in the Indian markets and that figure has crossed over ₹1 lakh crore within three months of 2026, data from the National Securities Depository Limited (NSDL) showed. The latest round of selling by the FIIs has coincided with rising tensions in the Middle East, which has triggered an up move in crude prices resulting in fears of inflation, and rupee hitting record low against the US dollar, analysts noted.

FIIs have so far this month sold shares worth ₹88,180 crore, as per the data compiled by the NSDL. On Friday itself, FIIs sold shares to the tune of ₹5,518.39 crore which was countered by purchase of shares worth ₹5,706 crore by the domestic institutional investors.

The sharp sell-off follows a strong rebound in February, when FIIs pumped in ₹22,615 crore, the highest monthly inflow in 17 months, NSDL data showed.

With the latest withdrawals, total FPI outflows have crossed the ₹1 lakh crore-mark so far in 2026. This is followed FII outflows of ₹1,66,286 crore in 2025 and net buying of ₹427 crore in 2024.

However, the outflow is still lower than the record monthly exodus of ₹94,017 crore seen in October 2024.

Market participants attributed the sustained selling pressure to global macroeconomic headwinds and heightened geopolitical uncertainty causing fears of inflation across the world.

Rising US Treasury yields as another key driver for foreign fund outflows, Himanshu Srivastava, Principal Manager Research at Morningstar Investment Research India told news agency Press Trust of India (PTI).

Higher yields have improved the relative attractiveness of dollar-denominated assets, prompting capital to move away from emerging markets like India. This shift is typically accompanied by a stronger dollar and tighter global liquidity, further dampening sentiment towards emerging market equities he said.

In the ongoing selloff, the SENSEX has crashed as much as 13%, and the NIFTY50 index has collapsed 12% from the record highs they touched in December last year.

The selling pressure has been intense among the mid- and small-cap shares as the NIFTY Midcap 100 and NIFTY Smallcap 100 indices have tumbled 20% from record highs they touched in December 2024.

The correction has led to a massive erosion of investor wealth, as wealth worth ₹44.69 lakh crore has been wiped out during the ongoing downturn in the markets. The sentiment, which began deteriorating around October 2024, has remained subdued amid rising valuation concerns and an increasingly uncertain global environment, analysts said.