Overseas investors have continued to pull money out of Indian equities in 2026, remaining net sellers so far amid concerns over India’s relatively limited exposure to the artificial intelligence-driven investment boom. Global brokerage Bernstein has also pointed to a broader concern, noting that large Indian companies are facing increasing pressure to reinvent their businesses as emerging technologies disrupt traditional business models, giving foreign investors fewer reasons to maintain their exposure to some of the country’s biggest corporates, CNBC reported.
According to the report, the global brokerage highlighted that many Indian large caps represent a bygone economic era, adding that these businesses do not offer “high growth” rates that can justify the “sky-high valuations” of Indian markets. Mint could not independently verify this report.“Most [large corporates] are not investing in the future, but consolidating their past, often expecting policy to continue shielding them from global competition,” the report said.

Large corporates with the “deepest pockets” are reluctant to provide the capital India needs to develop scale in emerging technologies like electric vehicles and semiconductors, it said. India’s limited exposure to AI tradeWith no local champions in artificial intelligence and the IT services industry facing the brunt of AI advancements, India is widely seen as an anti-AI trade.
However, Bernstein pointed out that even if the global AI trade weakens, India is unlikely to see any major reversal of foreign capital flows.“It would be a folly to think that it’s just a matter of time, and once the AI trade settles and the Middle East crisis resolve, foreign money is just waiting to be parked into India,” Bernstein said.

FPI sold record ₹2.45 lakh worth Indian stocks in 2026Foreign Portfolio Investors (FPIs) have withdrawn ₹20,974 crore from Indian equities so far in September, according to NDSL data. The latest selling comes after FPIs invested ₹20,200 crore in July and ₹29,630 crore in August.
With the September outflows, total FPI withdrawals from Indian equities in 2026 have reached ₹2.45 lakh crore, surpassing the ₹1.66 lakh crore outflow recorded during the whole of 2025. The heavy foreign selling has added pressure to the Indian rupee, although the currency has also been affected by elevated crude oil prices, global bond yields, and dollar demand.

The rupee hit a record low of 96.96 per US dollar in May 2026, prompting the Reserve Bank of India to intervene in the foreign-exchange market. Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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