FPIs Pull Out Rs 2.6 Lakh Crore in 2026, Financial Services Hit Hardest, Rupee Weakens

Foreign portfolio investors withdrew more from Indian equities by June 3 than in all of 2025, with financial services accounting for the largest share of outflows.

The Wire Staff

Foreign portfolio investors withdrew more from Indian equities by June 3 than in all of 2025, with financial services accounting for the largest share of outflows.

fpis pull out rs 2 6 lakh crore in 2026 financial services hit hardest rupee weakens

A person counts Indian rupee notes in Siliguri on February 25, 2026. Photo: PTI.

New Delhi: The financial sector in India has been bleeding in terms of foreign portfolio investments through the first five months of 2026 and continuing into June. The outflow has exceeded Rs 5,181 crore in just the second half of May this year. The total outflows over the year have exceeded the outfllow over all of 2025, says data from the NSDL, cited by news reports.

Large sustained outflows has been putting downward pressure on the rupee, because the withdrawal can mean conversion of rupees into dollars. Since January, the rupee has weakened from roughly Rs 90-91 per US dollar to about Rs 95.5-95.8 per dollar by June 5. On Thursday, June 4, the rupee closed at 95.79 against dollar, NDTV Profit reports.

A report in the Economic Times says citing experts that the highly liquid banking sector offered an "easy exit" to investors. It says automobiles and the oil and gas sector lost close to Rs 4,000 crore in FPI outflows over May 16 to 31. Net inflows were below Rs 9,000 crore in the same period, says the report.

The Economic Times says, citing NSDL data, that equities worth roughly Rs 2.6 lakh crore were offloaded by FPIs between January 1 and June 3. The outflows were largely – over 72% – were in the financial services sector combined with India's flagship export-oriented Information Technology Enabled Services (ITES) sector, said another report in the Financial Express.

While IT lost Rs 26,781 lakh crore, FMCG, or fast-moving consumer goods, were also drained of Rs 21,633 crore in 2026 so far, said the FE report. But the biggest losses were in the financial services sector alone, from which FPIs pulled out roughly Rs 1.15 lakh crore during January-May this year, said the FE report.

The outflows from the FMCG sector are a sign that foreign investors are becoming less enthusiastic about the domestic consumption story, at least at current prices. The IT outflows suggest that foreign investors are less confident about the sector's earnings and competitiveness, particularly as concerns grow over AI-driven disruptions and slower global technology spending.

However, the reports also indicate that the pace of selling slowed somewhat in the second half of May.

This article went live on June fifth, two thousand twenty six, at thirty-six minutes past two in the afternoon.

The Wire is now on WhatsApp. Follow our channel for sharp analysis and opinions on the latest developments.