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Foreign Portfolio Investment (FPI) flows successful FY26 remained volatile, starring to a nett outflow of $3.9 cardinal arsenic of December 2025, driven by elevated uncertainty and accrued superior allocation towards AI-centric markets specified arsenic the U.S., Taiwan, and Korea, the Economic Survey 2025-26 said connected Thursday (January 29, 2026).
Overall, FPIs were nett sellers of Indian securities from April to December 2025. They purchased Indian indebtedness securities portion offloading equities during the period.
Read here: Economic Survey 2025-26 LIVE updates
The sell-off from equities was chiefly owed to the "relative underperformance of Indian equities compared to different large markets, alongside commercialized and argumentation uncertainties, the depreciation of the Indian rupee, and abroad-based planetary risk-off sentiment amid elevated U.S. enslaved yields, which weighed connected FPI flows", it added.
These factors dampened sentiment towards Indian equities, peculiarly export-oriented sectors specified arsenic IT and healthcare, starring to continued FPI outflows successful FY26 (April-December).
According to the Survey tabled successful Parliament, "FPI flows this twelvemonth person been tepid owed to elevated uncertainty and accrued involvement successful AI-related fiscal investments successful countries specified arsenic the U.S., Taiwan, and Korea".
As a result, determination was a equilibrium of payments (BOP) shortage of $6.4 cardinal successful H1 FY26 compared to a surplus of $23.8 cardinal successful H1 FY25, which was funded by a diminution successful overseas speech (forex) reserves, it added.
The Survey projected that the outlook for FPI inflows into the indebtedness marketplace remains positive, supported by markets regulator Sebi's relaxation of FPI concern norms and ongoing India-US commercialized discussions.
As of December 2025, the plus basal nether custody of FPIs stood astatine ₹81.4 lakh crore, marking a 10.4% summation from March 31, 2025, driven mostly by valuation gains successful equities and dependable accumulation successful indebtedness holdings.
Within National Stock Exchange (NSE) listed equities, however, the stock of FPI ownership declined to 16.9% (for Q2FY26), successful enactment with planetary hazard aversion and sectoral reallocations.
In the midst of volatile overseas superior flows, home organization investors (DIIs), peculiarly communal funds and security companies, person counterbalanced FPI outflows' volatility and provided much-needed enactment to markets.
With continued buying, arsenic of September 2025, DII ownership wrong NSE-listed equities stood astatine 18.7%.
