FPI Ownership in NSE-Listed Companies Falls to 17-Year Low Amid FY26 Equity Sell-Off

Foreign Portfolio Investor (FPI) ownership in NSE-listed companies fell to 15.8% in FY26, the lowest level in 17 years, according to NSE’s monthly Market Pulse report for May.  

The shareholding declined by 90 basis points from the previous quarter as overseas investors continued to cut exposure to Indian equities. FPIs remained net sellers during the financial year, with total equity outflows estimated at nearly $19.7 billion.  

A large part of the selling was seen in the final quarter of FY26, which accounted for around 72% of the overall outflows recorded during the year. 

Global Markets Influence Investor Flows 

The report pointed to global factors behind the continued selling in Indian markets. Higher bond yields in the United States led investors towards safer fixed-income assets, while several Asian markets, including South Korea, Taiwan, Japan and Hong Kong, were trading at lower valuations compared to India. 

Selling activity also increased during March 2026 after geopolitical tensions in West Asia affected global investor sentiment.  

Despite the decline in ownership levels, the value of FPI holdings in Indian equities has grown at a compound annual growth rate of more than 18% since 2020. 

Sector Positioning Remains Uneven 

FPIs continued to hold an overweight position in financial stocks, although allocations were reduced slightly by the end of March 2026. The communications sector remained overweight for the seventeenth consecutive quarter. 

At the same time, foreign investors maintained underweight positions in industrials and materials. Exposure to healthcare, utilities, consumer discretionary and energy stocks remained largely unchanged during the period. 

Shift in Investment Pattern 

Data from Ace Equity, as of March 25, 2026, showed FPIs continued reducing stakes in large-cap companies within the NIFTY50 index.  

Holdings increased in only one NIFTY50 company for 4 consecutive quarters, while stakes declined in 10 companies over the same period. 

Domestic institutional investors offset part of the selling pressure by purchasing equities worth about $95.8 billion during FY26, according to the NSE report. 

Read More: Is the Stock Market (NSE and BSE) Closed Tomorrow, May 28, 2026, for Bakrid (Eid al-Adha)? 

Conclusion  

Foreign investors remained net sellers in Indian equities through FY26, driven by global market conditions and shifting allocations across Asian markets. 

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