India’s foreign portfolio investment story is becoming less comfortable than the headline numbers suggest. The important issue is not simply that overseas investors are selling Indian shares. It is that a significant part of foreign capital is proving increasingly willing to leave listed equities, while selectively returning to new issues and debt. That is a sign of a market in which price, liquidity and risk are being reassessed rather than one in which confidence is uniformly rising.

The distinction matters for the rupee. Gross selling of shares cannot be equated with an equivalent foreign-exchange outflow: one foreign investor can sell to an Indian buyer without any dollars leaving the country. But sustained net withdrawal eventually has a currency dimension when rupee proceeds are converted and repatriated. With foreign investors having recorded an equity outflow of about $28 billion during the first nine months of 2026, the pressure is no longer trivial. This comes at an awkward moment. India remains heavily dependent on imported crude oil, while global interest rates and geopolitical uncertainty can make dollar........

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