FPI Outflows Cross ₹3 Lakh Crore; Amundi Sees Renewed Interest in India

Overview: Foreign portfolio investors (FPIs) have withdrawn ₹3.04 lakh crore from Indian equities in 2026 as high US bond yields, elevated crude oil prices and the artificial intelligence (AI) rally in North Asian markets influence investment decisions. Amundi Group Chief Investment Officer Vincent Mortier believes India’s economic growth and public finances could attract foreign capital again. However, the timing and scale of any recovery remain uncertain.

Foreign portfolio investors have pulled more than ₹3 lakh crore out of Indian equities in 2026, adding to pressure on the domestic stock market. The scale of the selling has raised questions about India’s appeal to overseas investors at a time when global capital is flowing towards AI-linked companies and other markets.

However, Amundi’s chief investment officer, Vincent Mortier, believes foreign investors could return as global valuations and economic conditions change. His assessment offers a different perspective on the outflows and raises an important question for Indian businesses: what could changing global investment priorities mean for future funding and growth?

Amundi Expects Foreign Investors to Return

Foreign investors have favoured AI-linked companies and other markets over Indian equities in recent years. However, Vincent Mortier believes this trend could change as investors reassess the earnings prospects of highly valued AI companies.

In his October 12 interview with Mint, Mortier explained that heavy US government borrowing and corporate spending on AI infrastructure have pushed up long-term bond yields. These higher yields increase borrowing costs and could affect economic activity. Mortier believes the pressure from long-term rates may also limit the need for further short-term US Federal Reserve rate increases.

He also expects advances in AI to reduce computing costs. As computing capacity expands and cheaper AI models become available, some companies may struggle to justify their high valuations.  This could challenge the valuations of companies whose share prices have risen on expectations of sustained AI growth.

A fall in oil prices, if geopolitical tensions ease, could also improve the outlook for emerging markets such as India. Together, these developments could encourage global investors to review their investment allocations.

What Vincent Mortier Said About India

Mortier expressed confidence that foreign investors would eventually return to Indian equities.  “It’s a question of when, not if, that will happen,” he was quoted as saying.

He believes India’s economic growth and public finances remain important strengths. He also expects investors to reconsider their allocations if expectations surrounding AI earnings become more realistic.

However, this is Mortier’s investment outlook, not a guarantee of future inflows. The timing and scale of any recovery will depend on global conditions and India’s relative investment appeal.

FPI Outflows Cross ₹3 Lakh Crore in 2026

According to NSDL data, FPIs withdrew ₹44,166 crore from Indian equities between 1 and 11 October 2026.  This took their net equity outflows for 2026 to ₹3.04 lakh crore.

The figure is substantially higher than the ₹1.66 lakh crore withdrawn during the whole of 2025. September recorded net equity outflows of ₹35,861 crore. Before that, FPIs invested ₹20,200 crore in July and ₹29,631 crore in August.

Market participants have linked the selling to elevated crude oil prices, a stronger US dollar and high US bond yields. The AI-led rally in North Asian markets has also attracted foreign capital.

Trackk co-founder and chief executive officer Vedant Gupte viewed the selling as a global reallocation of capital rather than a rejection of India’s investment prospects. Geojit Investments’ chief investment strategist VK Vijayakumar, meanwhile, highlighted high US bond yields and weak Indian market performance as factors influencing foreign investment decisions.

These explanations suggest that several global and domestic factors are influencing FPI flows. The outflow figures alone do not establish that foreign investors have permanently lost confidence in India.

Why India Remains Attractive to Foreign Investors

Mortier believes India’s economic prospects remain strong despite the recent weakness in its equity market. He has pointed to the country’s growth outlook and public finances as reasons for investors to reconsider their exposure.

Currency movements remain an important concern. A fall in the rupee can reduce the returns foreign investors receive when they convert their Indian investments into another currency. Currency-hedging costs can also affect their final returns.

Mortier has stressed the importance of predictable taxation and consistent regulations. Investors consider these factors alongside growth prospects, valuations and potential returns when deciding where to allocate capital.

Businesses and investors can also refer to SetIndiaBiz’s guides on FPI exit rules in India and FPI onboarding and SEBI-RBI rules for related regulatory context.

What FPI Outflows Mean for Indian Businesses

FPI outflows primarily affect listed equity markets, investor sentiment and share valuations. Their wider impact on businesses depends on market conditions, access to capital and movements in the rupee and commodity prices.

• Companies seeking investment: Weak market sentiment can affect valuation expectations and the timing of equity fundraising. Businesses planning to raise capital should maintain realistic financial projections and keep their corporate records ready for investor due diligence.
• Startups and entrepreneurs: Foreign portfolio investment in listed shares is different from private investment in startups. However, sustained market uncertainty can influence investor confidence. Founders should assess their funding requirements and avoid relying on an assumed improvement in market sentiment.
• Importers and manufacturers: High oil prices can raise freight and operating costs, while rupee depreciation can make imported machinery, components and raw materials more expensive. These pressures may reduce margins and increase working-capital needs. Businesses involved in cross-border trade should review their foreign exchange exposure and applicable FEMA export-import requirements.
• Indian IT companies: AI presents both opportunities and risks. Companies that use AI to deliver higher-value services may benefit, while others could face pressure on pricing, revenue growth and profitability. The impact will depend on each company’s business model and ability to adapt.

Directors and finance teams should review liquidity, funding plans, currency exposure and operating costs. These measures can strengthen business preparedness without assuming that foreign capital will return immediately.

SetIndiaBiz Support

Businesses preparing for fundraising and expansion need sound corporate records, clear shareholding structures and consistent regulatory compliance. Investors may examine these records and the company’s regulatory position before committing funds. Setindiabiz supports startups, micro, small and medium enterprises (MSMEs) and established companies with incorporation, corporate structuring, statutory filings and ongoing compliance management.

Well-maintained statutory books and company registers, along with properly documented shareholding arrangements, can help businesses prepare for investor due diligence. SetIndiaBiz professionals handle relevant compliance requirements so that founders and directors can focus on operations, fundraising and growth.

FAQs

Amundi’s outlook suggests that current FPI outflows need not signal a permanent loss of interest in India. However, businesses should plan for continued uncertainty rather than assume foreign capital will return immediately. Cost control, sound financial planning and regulatory compliance remain important regardless of the direction of FPI flows.