FPI outflows persist in equities; primary market sees continued interest

While 2026 appears to be a lacklustre year for IPO activity, with only a handful of listings so far, Foreign Portfolio Investors (FPIs) have remained steady participants in the primary market—even as they continue to be persistent sellers in the secondary market.

Based on NSDL data, FPIs invested a total of ₹12,339 crore in the primary market between January and April. Monthly flows remained relatively consistent, with investments of ₹2,778 crore in January, ₹2,832 crore in February, and a peak of ₹4,408 crore in March, before moderating to ₹2,319 crore in April.

Conversely, the total foreign portfolio investment outflows from India for 2026, to date, have reached a significant ₹191,968 crores. Experts believe a key trend in FPI flows this year is a shift of capital towards markets such as Japan, South Korea, and Taiwan, which are attracting strong inflows. In contrast, India and some other emerging markets are witnessing outflows amid challenges such as elevated energy prices and currency depreciation.

This trend indicates a distinct shift in FPI strategy: as they withdraw from listed equities amid global uncertainties and a risk-averse mood, they are allocating funds to primary issues.

Market experts point out that these investments are generally influenced by appealing valuations, yield prospects (notably in InvITs), and the dynamics of institutional allocations, suggesting that FPIs still recognise the potential in India's long-term growth narrative despite short-term fluctuations.

Discussing India's IPO market in 2026 reveals a varied trend so far, with significant activity in the initial months but a decline observed in April. Over 60 IPOs, including small- and medium-sized enterprise listings, have entered the market, raising approximately ₹22,000– ₹24,000 crore, as per reports.

The quarter ending in March was especially strong, as around 18 mainboard IPOs raised close to ₹18,778 crore, indicating a solid appetite from investors.

Despite earlier momentum, April saw a slowdown, with only a few listings and several companies postponing public offerings amid rising market volatility and geopolitical concerns. Recent notable offerings include Citius Transnet InvIT and Om Power Transmission, while the SME segment remained active with listings such as Adisoft Technologies, Mehul Telecom, and Amba Auto Sales. Earlier this year, firms such as Powerica, Sai Parenterals, and TIPCO Engineering had also entered the market.

What has been the trend of FPIs in the primary market?

According to Arun Kejriwal, founder of Kejriwal Research and Investment Services, April was a lacklustre month for the primary market, with very few listings. He noted that key issuances included the bond offering from Citius Transnet InvIT and a small issue from Om Power Transmission, while offerings from Powerica and Sai Parenterals had largely concluded in March. Kejriwal added that a significant portion of FPI investment during the month was concentrated in Citius Transnet InvIT, highlighting that such instruments attract investors primarily due to their yield appeal.

Echoing a broader trend, V K Vijayakumar, Chief Investment Strategist at Geojit Investments Ltd, said FPIs have remained consistent investors in the primary market despite persistent selling in the secondary market. He attributed this divergence to relatively fair valuations in IPOs and selective participation in high-growth offerings.

Meanwhile, Sunny Agrawal, Head of Fundamental Research at SBI Securities, noted that of the three IPOs in April 2026, two were InvITs offering yields of around 6–7%, making them attractive to long-term institutional investors, such as pension funds, seeking stable income. The third issue, from the power sector, also drew attention amid rising demand driven by heatwaves and AI-driven consumption. Overall, he noted that FPI participation was largely guided by fund mandates, with some investors also targeting listing gains.

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