FPI investments in the primary market have almost halved in FY26

ET Intelligence Group: While foreign portfolio investors (FPIs) have intensified their selling into the Indian secondary equity market in the two months through January, their outflows of $16.7 billion (₹1.5 lakh crore) in the first ten months of the current fiscal year (FY26) remained significantly below the $23.5 billion (₹2 lakh crore) in the comparable period of the previous year. This was due to record high monthly outflows of $13.6 billion in October 2024 and their favorable stance in the first quarter of FY26 when they invested $3.5 billion, compared to a similar size outflow in the first quarter of FY25.

While secondary market sales by FPIs have slowed so far in FY26, their purchasing in the primary market has also slowed. This could raise concerns as it implies declining appetite from foreign investors for Indian equities amid relatively rich valuations and lucrative opportunities in other emerging markets. They invested $7.2 billion in initial public offerings (IPOs) and qualified institutional placements (QIPs) in the first ten months of FY26, almost half of the $13.3 billion they invested in the year-ago period.

Total outflows from FPIs, including primary and secondary markets, amounted to $9.5 billion in the ten months to January 2026, lower than the annualized sales value of $10.2 billion.

On a monthly basis, FPIs continued to sell Indian equities for the third month in a row in January, recording total outflows of nearly $4 billion. They have been net sellers in six of the 10 months of the current fiscal year so far.

Domestic mutual funds continued to support equities with the help of unabated fund inflows. They have plowed ₹43,973.7 crore in January through January 29. They remained net buyers of shares in each of the first ten months of FY26. Their net investment stood at ₹4.2 lakh crore in the 10 months to January 2026, comparable to ₹4.1 lakh crore in the corresponding period of the previous year.