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In a major setback for Indian markets, foreign investors have pulled out a record ₹1.99 lakh crore (around $21-24 billion) from Indian equities in 2026 so far. This is the biggest capital outflow seen since the country opened its markets to foreign investors in 1993, according to a report that quotes agencies Financial Times and NSDL.

Foreign investors now hold only a 14.7% stake in Indian stocks, the lowest in over a decade. It's being fueled by factors such as valuations; the trend of expanding gains in other Asian markets that drove investors to buy into AI stocks; geopolitical risks (including disturbances in the West Asian oil supply) and a troubled rupee; and high yields in the United States.

In spite of a massive exit by FIIs, the domestic institutional investors (DIIs) and the volume of strong SIPs have been instrumental in holding the market down. Outflows to ease if global risks abate, but the trend should engender caution at the global funds in Indian assets for the near term.