FPI Exodus: Financial sector sees over ₹19,000 crore outflows in April; IT, FMCG, Auto also hit

Foreign Portfolio Investors (FPIs) maintained a strong selling stance in Indian equities during the first half of April (2026), unloading stocks valued at ₹48,141 crore, with the financial services sector being the hardest hit as they sold stocks worth ₹19,152 crore, followed closely by consumer services ( ₹5,338 crore) and healthcare ( ₹4,481 crore).

Additional key sectors that experienced significant outflows included automobiles and auto components ( ₹3,704 crore), oil & gas ( ₹3,352 crore), and FMCG ( ₹2,976 crore), reflecting a widespread risk-averse attitude. Selling pressure was also observed in the telecom, real estate, IT, and construction sectors, although to a lesser degree.

Conversely, only a few sectors, such as power ( ₹601 crore) and utilities, saw slight inflows, indicating selective buying amidst the overall downturn.

As per NSDL data, foreign portfolio investors divested Indian stocks amounting to ₹1,17,775 crore in March. The financial services sector witnessed the largest impact from these outflows, with investors withdrawing ₹60,655 crore, which represents more than 50% of the overall outflows.

Experts point out that the energy crisis caused by the conflict in West Asia, along with the potential repercussions for the Indian economy and the ongoing decline of the rupee, has kept FPIs in a selling mode. Other markets, such as South Korea and Taiwan, are viewed as more appealing from the FPI standpoint, as they are projected to deliver significantly better earnings growth compared to the modest growth anticipated in India for FY27.

The significant drop in the market following the start of the war has resulted in fair valuations; however, they are not yet considered compelling buying opportunities, believes analysts.

Why are FPIs dumping financial stocks?

Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Ltd, explained that financial stocks account for the major part of FPI’s assets under custody. So when they are on a sell mode they sell stocks which are liquid and easy to sell.

Further, Vijayakumar highlighted that last year was mainly a year of AI trade. AI stocks delivered superior returns. India being an AI laggard couldn’t benefit from this. The superior performance of markets like South Korea and Taiwan was driven by the impressive earnings growth of AI stocks in these markets. Even this year these markets are doing well supported by expectations of excellent earnings growth of AI stocks.

“Dumping of financial stocks by FPIs have made their valuations attractive. This presents a buying opportunity for long-term investors,” added Vijayakumar.

How is the future FPI flow expected to be?

Shrikant Chouhan, Head of Equity Research at Kotak Securities, said global equity markets continue to be driven largely by news flows around the West Asian conflict and related negotiations, leading to sharp divergence in returns across geographies.

He noted that India has also entered the Q4FY26 earnings season, with expectations of marginal-to-modest growth. On the macro front, March CPI inflation (based on the new series) stood at 3.4% year-on-year, while goods exports declined 7.4% YoY to $38.9 billion and imports fell 6.5% YoY to $59.6 billion.

Given these factors, Chouhan expects FPI flows to remain volatile in the near term.

Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.