Foreign Investors Flee India: Lowest Holdings in 15 Years

Foreign ownership of Indian equities has fallen to its lowest point in nearly 15 years, standing at 14.02% by the close of the September quarter (Q2FY27). This sustained retreat by overseas investors is driven by concerns over high valuations, global geopolitical instability, and elevated US bond yields.

Despite the overall decline in holdings, foreign portfolio investors (FPIs) turned net buyers during the September quarter, injecting ₹13,970 crore into the market. This follows significant outflows in previous quarters, with net outflows for 2026 reaching ₹2.9 trillion.

Conversely, domestic mutual funds have bolstered their presence, with their ownership rising to a new high of 11.59% in September. This increase in domestic capital has been crucial in absorbing foreign selling and supporting market stability.

Largecap companies have experienced the most pronounced reduction in foreign ownership, with FPIs cutting stakes in 57% of analyzed largecaps sequentially. This contrasts with midcap stocks, where foreign holdings increased in a higher percentage of companies, and smallcaps saw a more mixed trend. Largecap funds also experienced net outflows, while midcap and smallcap funds attracted significant inflows.