Foreign portfolio investors held 14.02% of Indian equities at the close of the September quarter, sliding from a previous peak of 20.09% in late 2020. This contraction persisted even as foreign funds deployed ₹13,970 crore during the period. Domestic mutual funds aggressively filled the void by lifting their market share to a record 11.59% through a massive ₹1.7 trillion net capital deployment.
Key points
Record participation from domestic mutual funds narrowed the equity ownership gap with fo…: Record participation from domestic mutual funds narrowed the equity ownership gap with foreign investors to 2.43 percentage points.
Foreign equity holdings have experienced a sustained decline since reaching a high of 20.…: Foreign equity holdings have experienced a sustained decline since reaching a high of 20.09% in December 2020.
Analysts believe a sustained foreign rebound requires lower US interest rates and stronge…: Analysts believe a sustained foreign rebound requires lower US interest rates and stronger earnings growth to justify premium valuations.
Sources checked by our analysis pipeline: 1
Foreign investors’ ownership of Indian equities has fallen to its lowest level in nearly 15 years amid valuation concerns, geopolitical uncertainty, and elevated US bond yields, even as they returned to the market as net buyers in the September quarter.
A Mint analysis of 5,638 BSE-listed companies sourced from the CMIE database showed that foreign portfolio investors (FPIs) held 14.02% of shares at the end of the September quarter (Q2FY27), their lowest since December 2011. Their ownership fell nearly 0.4 percentage points sequentially and 154 basis points over the past year. It is now 6.07 percentage points below its December 2020 peak of 20.09%, reflecting a sustained retreat by overseas investors.
FPIs, however, turned net buyers during the September quarter, net investing ₹13,970 crore. They had pulled out ₹1.43 trillion in the June quarter and ₹1.31 trillion in the March quarter. Their net outflows for 2026 so far stand at ₹2.9 trillion.
FPIs had withdrawn ₹76,619 crore in the September quarter of 2025. Net outflows for the first nine months of 2025 were at ₹1.5 trillion.
Trading sentiment remains balanced across domestic equity markets following recent corporate financial announcements. Investors are monitoring market activity closely as major tech shares experience fluctuations due to recent corporate reporting. The overall atmosphere shows measured trading as financial reports influence individual stock performance.
Global investors are scaling back their exposure to Indian public debuts due to elevated pricing, soft secondary performance, and competition from artificial intelligence plays abroad. Local mutual funds and insurers are absorbing the slack, capitalizing on massive retail inflows to exert greater control over deal valuations. This structural transition reduces domestic listing dependence on international liquidity while leaving overseas institutions focused almost exclusively on large-scale offerings.
Wall Street analysts expressed significant reservations regarding the company's performance in key business metrics, prompting a sell-off in shares. Market watchers specifically took pause over a notable deceleration in U.S. commercial contract growth. This targeted weakness overshadowed an otherwise impressive financial performance that comfortably surpassed initial earnings expectations.