Foreign institutional investors have accelerated their exit from Indian equities, selling about $53 billion since late 2024 and pushing the MSCI India index down roughly 8% between September 2024 and May 2026. In Q4, HDFC Bank topped the list with foreign investors cutting 47.95 crore shares and selling Rs 41,449 crore, alongside heavy selling in Kotak Mahindra Bank and Bharti Airtel. Despite the pressure from FIIs, domestic institutions have increasingly taken the lead.
The Nifty IT index fell sharply on Tuesday, dropping 3.58% to around 28,358 points, as the Indian rupee slid to an all-time low of 95.32 against the dollar. Foreign fund outflows and a jump in global crude prices to about $105 fueled margin fears, pulling down major names like TCS and Infosys during mid-day trade.
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Indian markets rallied in April 2026, but the standout move came from microcaps, which outperformed Nifty along with small and midcaps. The twist: macro worries persisted, foreign flows stayed weak, and the rupee faced pressure. Yet fundamentals didn’t improve materially, pointing to trading momentum and sentiment driving gains more than earnings upgrades.
The Indian rupee slid to a record low of 95.33 per US dollar as surging crude oil prices and escalating foreign outflows intensified economic stress. Inflation concerns, widening deficits, and weak capital flows continued to weigh on the currency, while central bank interventions struggled to counter depreciation driven by energy disruptions.
The Indian rupee closed at a record low of 94.85 per USD, as surging oil prices lifted import costs and stalled diplomatic efforts around the Iran conflict. At the same time, persistent foreign selling of Indian assets added fresh pressure, worsening sentiment and weakening demand for the rupee ahead of future FX moves.
Foreign investors have withdrawn more than $20 billion from Indian equities in just the first four months of 2026, already surpassing the total record exit seen last year. The pullback is linked to worsening sentiment after Iran war-related disruptions pushed oil prices higher, adding pressure to India, a major crude importer, and dimming investor appetite for Asian risk.
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