Foreign Investors Withdraw Nearly Rs 33,000 Crore Amid Weaker Rupee

In May, Foreign Portfolio Investors (FPIs) significantly reduced their investments in Indian equities, withdrawing Rs 32,963 crore as they faced a weakening rupee and found more appealing investment options abroad. This withdrawal adds to a cumulative FPI outflow of Rs 2.25 lakh crore for 2026.

The downturn follows a high withdrawal period where investors, except for a brief positive period in February, have been pulling out consistently. Analysts attribute this trend to uninspiring domestic earnings, a fluctuating rupee, and regional geopolitical influences affecting oil imports and prices.

Market experts like V K Vijayakumar point to competitive market gains in countries like the US, Japan, and South Korea as driving factors for this diversion of funds. Meanwhile, headwinds in India such as rupee depreciation, economic concerns, and oil import costs exacerbate the situation.

While the pace of outflows has moderated in May compared to previous months, financial insiders suggest a notable turnaround is unlikely without major improvements in economic conditions and broader global market stability.

(With inputs from agencies.)