FPI equities selling in May 2026 tapers to $(3.44) Billion

FPI SELLING CONTINUES; BUT INTENSITY OF SELLING TAPERS

After monthly FPI selling peaked in March 2026 at $(12.58) billion; it halved to $(6.49) billion in April and again halved to $(3.44) billion in May 2026. Out of the 23 sectors, 5 sectors saw net buying, while 18 sectors saw net selling in May 2026. Net selling was again dominated by BFSI, accounting for 70% of the FPI selling in May, at $(2.42) billion.

To put things in perspective, FPIs have now sold $58 billion of equities since the peak of September 2024, of which $26 billion of selling has happened in the first 5 months of calendar 2026. That is reflected in the sharp fall in the FPI AUC since Sep-24.

Data Source: NSDL

PUTTING THE MAY 2026 FPI SELLING IN CONTEXT

• From a longer-term perspective, the FPI net selling of $58 billion since Sep-24, has resulted in the FPI equity AUC falling -23.7% from $931 billion to $710 billion. Overall FPI AUC (including debt) fell from $1,007 billion to $784 billion in this period.

• While the war situation has been volatile, the bigger risk is the best-case scenario. It is now estimated that even if the war ends; oil prices will remain elevated, supply chain constraints will be intense, and the rupee will continue to be vulnerable.

• The month of May 2026 also saw India dropping to seventh position in the market rankings behind Taiwan and South Korea. Clearly, India missing out on the AI pivot is costing equity markets dearly in terms of FPI flows, MSCI Weight, and Valuations.

SECTORS DRIVING FPI ACTION IN MAY 2026

Sectoral FPI flow patterns have been broadly consistent in the last few months.

• At $(2.42) billion, FPI selling in BFSI accounted for a whopping 70.2% of overall FPI selling in May 2026. BFSI remains the most vulnerable to passive ETF adjustments.

• The oil & gas sector saw net selling of $(937) million as the ongoing turmoil and rising fuel subsidy burden has kept most downstream players under pressure

• Customer facing sectors like consumer services, consumer durables, and FMCG saw combined net selling of $(732) million as inflation is seen hitting purchasing power.

• Supply chain concerns led selling in auto, cement, and construction sectors. These 3 sectors saw input delays and freight spikes as overall FPI selling was $(562) million.

• Traditional export driver, Information Technology, has been under selling pressure, despite weak rupee, more due to AI disruption risks; net selling at $(199) million.

• What about the buy-side story? Buying was focused in Services, Metals, and Capital Goods; with net FPI buying of $1.75 billion in May 2026. While the story of metals and capital goods is already well known, the transport, logistics, and KPO service companies like IXIGO, Urban, and Delhivery attracted strong FPI buying interest.

FPI flows pivoted to markets like Taiwan and Korea in a big way over the last one year. India has to proffer a very strong reason for these flows to come back to India!