FII selloff in H12026 exceeds 2025 outflows: Factors keeping investors on the edge
Sensex and Nifty are down 9.49% and 8%, respectively this year and amid crash in the IT sector.
- Jun 29, 2026,
- Updated Jun 29, 2026 9:06 AM IST
Foreign institutional investors (FIIs) are on a selling spree this year in the Indian equity market. They have surpasssed the 2025 outflows in the first six months of this year. FIIs sold equities worth Rs 2.2 lakh crore in 2026 higher than the Rs 1.6 lakh crore in 2025. Global funds are directing fund outflows toward other Asian and developed markets where valuations are seen as more attractive.
Foreign investors have been pulling billions of dollars out of Indian equities as rising US Treasury yields and a prolonged higher interest-rate environment make developed-market assets more attractive. The shift in global capital flows has weighed heavily on Indian markets, contributing to sustained selling pressure.
The Indian market has seen a huge selloff amid growing concerns that advances in artificial intelligence could disrupt the traditional outsourcing business model. Since leading Indian software companies derive more than half of their revenue from overseas markets, investors are worried that AI-driven automation could slow future demand for conventional IT services and impact long-term earnings growth.
At the same time, the global AI investment boom has redirected capital toward countries with well-established semiconductor ecosystems, such as Taiwan and South Korea. These markets have emerged as key beneficiaries of AI-related investments, attracting a larger share of global funds, while India has received comparatively less attention during the current technology-driven investment cycle.
Geopolitical tensions in West Asia, particularly involving the United States and Iran, have added another layer of uncertainty by driving Brent crude oil prices sharply higher in 2026. Oil prices peaked at over $116 per barrel this year amid war between US and Iran.
Elevated crude prices raise India's import bill, fuel inflationary pressures, widen the current account deficit, and raise input costs for several oil-dependent sectors, putting additional pressure on corporate profitability and investor sentiment in the stock market.
Sensex and Nifty are down 9.49% and 8%, respectively this year and await recovery buying in the beaten down IT sector. Nifty IT index is down 28% this year- the largest sectoral loser in the Indian equity market.
Foreign institutional investors (FIIs) are on a selling spree this year in the Indian equity market. They have surpasssed the 2025 outflows in the first six months of this year. FIIs sold equities worth Rs 2.2 lakh crore in 2026 higher than the Rs 1.6 lakh crore in 2025. Global funds are directing fund outflows toward other Asian and developed markets where valuations are seen as more attractive.
Foreign investors have been pulling billions of dollars out of Indian equities as rising US Treasury yields and a prolonged higher interest-rate environment make developed-market assets more attractive. The shift in global capital flows has weighed heavily on Indian markets, contributing to sustained selling pressure.
The Indian market has seen a huge selloff amid growing concerns that advances in artificial intelligence could disrupt the traditional outsourcing business model. Since leading Indian software companies derive more than half of their revenue from overseas markets, investors are worried that AI-driven automation could slow future demand for conventional IT services and impact long-term earnings growth.
At the same time, the global AI investment boom has redirected capital toward countries with well-established semiconductor ecosystems, such as Taiwan and South Korea. These markets have emerged as key beneficiaries of AI-related investments, attracting a larger share of global funds, while India has received comparatively less attention during the current technology-driven investment cycle.
Geopolitical tensions in West Asia, particularly involving the United States and Iran, have added another layer of uncertainty by driving Brent crude oil prices sharply higher in 2026. Oil prices peaked at over $116 per barrel this year amid war between US and Iran.
Elevated crude prices raise India's import bill, fuel inflationary pressures, widen the current account deficit, and raise input costs for several oil-dependent sectors, putting additional pressure on corporate profitability and investor sentiment in the stock market.
Sensex and Nifty are down 9.49% and 8%, respectively this year and await recovery buying in the beaten down IT sector. Nifty IT index is down 28% this year- the largest sectoral loser in the Indian equity market.