Foreign institutional investors (FIIs) recorded record outflows from Indian equities in 2025, selling shares worth approximately Rs 1.66 lakh crore. This trend continued into early 2026, with significant selling in the first two sessions. Factors cited for the exodus include elevated valuations, the 'AI trade', weak earnings, and rupee depreciation. Conversely, domestic institutional investors (DIIs) saw record inflows, offsetting some FII selling. Analysts anticipate a potential reversal in FII strategy for 2026, citing India's strong fundamentals and expected earnings growth.