Why are foreign investors leaving Indian stocks? Bernstein flags ‘bygone’ large-cap businesses, low AI exposure

Foreign Portfolio Investors have withdrawn around 2.45 lakh crore from Indian equities so far in 2026, surpassing the 1.66 lakh crore outflow recorded in all of 2025, with September alone seeing 20,974 crore in selling. Global brokerage Bernstein flagged that many Indian large-caps represent a bygone economic era with limited exposure to AI-driven growth and valuations that are not justified by growth rates. The heavy foreign selling has pressured the Indian rupee to a record low of 96.96 per US dollar, prompting RBI intervention in the forex market.