Tepid earnings, rupee slide push FPI returns into red

Lacklustre corporate earnings growth and a steeply depreciating currency have eroded foreign portfolio investor (FPI) returns over the last year, driving them out of Indian markets, a trend likely to continue amid elevated crude oil prices due to the West Asia war, according to analysts.

- Ram Sahgal

The Nifty 50 USD, which measures India's bellwether stock index in dollar terms, has generated a 13.41% negative return, compared with the barely 4% negative return of the index in rupee terms over the past one year through 22 May, per Bloomberg data.

This has resulted in foreign portfolio investors (FPIs) withdrawing $39.94 billion (33.65 trillion) from Indian secondary markets over the period (22 May 2025-22 May 2026). While mutual fund-led domestic institutional investors (DIIs) net invested a whopping ₹8.98 trillion over the same period, the outflows by FPIs caused the Nifty to slip almost 4% to 23,719.30 in the past one year through Friday.

Consequent to the heavy selling FPI ownership of NSE listed firms has hit a 17 year low of 15.8%, per exchange data.