How FPI Money Moved in India Over the Last Year - A Story of Outflows, Rotation and Selective Conviction

Over the past year, foreign portfolio investment (FPI) flows into Indian equities were dominated by one headline: large capital outflows. Rising interest rates in the United States, a stronger dollar, global risk aversion, and periodic trade tensions with India pushed global investors to pull money out of emerging markets, including India.

Several reports during the year pointed to heavy FPI selling at the market level, reinforcing the perception that foreign investors were stepping back sharply. However, a closer look at sector-wise data from January 2025 to January 2026 reveals a more layered story. While headline outflows were real, they coexisted with sustained and selective inflows into specific sectors.

In other words, FPIs were exiting the market broadly, but not evenly.

Big Outflows at the Top, Careful Choices Below

At the aggregate level, FPIs reduced their exposure to Indian equities as global money flowed toward safer assets. Higher US bond yields offered attractive returns with lower risk, making equity allocations, especially in emerging markets, less appealing.

Yet, the sector-level data show that FPIs did not treat all parts of the market the same.

Capital was pulled out aggressively from some areas, while other sectors continued to receive steady inflows, acting as anchors during a volatile year.

This divergence becomes clear when looking at metals & mining, oil & gas, and telecommunications.

Best Performing Sectors: Where FPIs Stayed Invested

1. Telecommunications was the clear leader. Over the year, the sector recorded a net FPI inflow of ₹43,445 crore, making it the strongest-performing sector by a wide margin. What stands out is not just the size of the inflow, but its consistency. Telecom saw positive flows in almost every month, including large additions during periods when the broader market was seeing sharp selling. This tells us that FPIs were not trading telecom tactically; they were building long-term exposure. Strong domestic demand, predictable revenues, and limited exposure to global trade shocks made telecom a safe and reliable choice in an uncertain environment.

   

2. Oil, gas and consumable fuels also ended the year in positive territory, with a net inflow of ₹7,491 crore. While the sector did see intermittent outflows, steady buying in select months helped it close the year with one of the strongest net inflows among cyclical sectors. FPIs appeared comfortable holding oil and gas stocks due to their strategic importance, stable domestic consumption, and improving balance sheets of large companies. In a volatile year, the sector acted as a stabiliser rather than a growth driver.

   
   

3. Metals and mining showed resilience despite global headwinds, closing the year with a net inflow of ₹16,187 crore. Inflows were recorded in several months, including March, July, September, October, December, and January, with a strong ₹3365 crore in July and ₹11,526 crore in January 2026. However, the sector also experienced sharp outflows in risk-off phases. This pattern suggests FPIs viewed metals as a cycle-linked opportunity, entering when global growth sentiment improved and exiting quickly when uncertainty returned. Still, the ability to end the year with net inflows highlights sustained investor interest.

Worst Performing Sectors: Where Capital Flowed Out

1. Information Technology was the worst-hit sector, witnessing a massive net FPI outflow of ₹76533 crore over the year. Persistent selling reflected concerns over slowing global tech spending, pressure on margins, and cautious client outlooks in key overseas markets. Even short-lived inflows failed to reverse the trend, as FPIs steadily reduced exposure throughout the year.

   

2. Financial services also faced heavy selling, recording a net outflow of ₹23495 crore. While there were months of inflows, especially during periods of optimism around credit growth, these were overwhelmed by sustained selling later in the year. Global investors appeared cautious about valuation comfort and exposure to economic slowdowns, leading to prolonged pressure on the sector.

   
   

3. Power rounded out the list of laggards, with net FPI outflows of ₹28389 crore. Although the sector benefits from long-term structural demand, concerns around capital intensity, regulatory oversight, and return visibility kept foreign investors on the sidelines. Inflows were sporadic and insufficient to offset steady selling pressure.

What the Contradiction Really Means

The past year was marked by genuine and significant FPI outflows from Indian equities; reports highlighting this were not wrong. But the sectoral data show that these outflows were selective rather than indiscriminate.

Metals saw active, sentiment-driven flows. Oil and gas sustained foreign interest. Telecommunications absorbed steady capital throughout the year.

They stayed invested where earnings were predictable, and demand was domestic, and exited sectors exposed to global slowdowns, valuation pressure, or uncertainty.

This is not a story of capital fleeing India; it’s a story of capital choosing its comfort zones carefully.

Disclaimer: This content is for educational purposes only; please conduct personal research and consult a qualified investment advisor before making any investment decisions.

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