With reference to the Indian equity market performance over the past year, consider the following statements: 1. Domestic mutual funds injected ₹4.98 lakh crore into the market. 2. Foreign Portfolio Investors (FPIs) withdrew over ₹2.17 lakh crore from Indian equities. 3. The Sensex trailing PE ratio stood at 30.3 times. Which of the statements given above is/are correct?

FPIs pull out ₹2.17 lakh crore, Sensex loses 13.6% in a year

GS3Economy · S&T · Environment · Security· Capital markets & SEBI· Prelims + Mains· 28 September 2026

Capital flight and market volatility: a GS3 case study on domestic investment resilience.

Why in news

Foreign Portfolio Investors (FPIs) withdrew over ₹2.17 lakh crore from Indian equities over the past year, contributing to a 13.6% decline in the Sensex.

Background

FPIs withdrew ₹2.17 lakh crore from Indian equities, while domestic mutual funds injected ₹4.98 lakh crore. The IT sector declined by 33.4% and the FMCG sector by 30.2% due to high oil prices and a weaker rupee.

Facts for Prelims

FactSensex lost 13.6% and Nifty lost 11.6% in the past year
FactDomestic mutual funds injected ₹4.98 lakh crore into the market
FactSensex trailing PE ratio stood at 20.3 times
FactIT and FMCG sectors saw declines of 33.4% and 30.2% respectively

Prelims practice question

With reference to the Indian equity market performance over the past year, consider the following statements:

Domestic mutual funds injected ₹4.98 lakh crore into the market.
Foreign Portfolio Investors (FPIs) withdrew over ₹2.17 lakh crore from Indian equities.
The Sensex trailing PE ratio stood at 30.3 times.

Which of the statements given above is/are correct?

(a)1 only
(b)1 and 2 only
(c)2 and 3 only
(d)1, 2 and 3

Show answer

Answer: (b) 1 and 2 only — Statements 1 and 2 are correct. Statement 3 is incorrect: The Sensex trailing PE ratio stood at 20.3 times.

For Mains

Q. Analyze the impact of Foreign Portfolio Investment (FPI) volatility on India's capital markets and suggest measures to enhance domestic investment resilience.

Dimensions to cover in your answer

External vulnerability: Sensitivity of equity markets to global oil prices and currency depreciation
Market correction: Cooling of valuations and trailing PE ratios relative to global peers
Domestic cushion: Role of domestic mutual funds in mitigating capital flight

Keywords: Capital Flight · Portfolio Investment · Market Volatility · Valuation Metrics · Currency Depreciation

Read the full news →Source: Economic Times ↗

More Economy notes

20 of 21 experts expect RBI rate hike as crude oil exceeds $100 · 5 October 2026
RBI Governor Sanjay Malhotra's hawkish speech signals higher rates amid $4.5 billion capital outflows · 5 October 2026
GST collections reach ₹12.46 lakh crore as taxable supplies grow 25.8% · 5 October 2026
Telangana State Government consistently lagged behind budget estimates for revenue receipts, RBI report says · 4 October 2026
Shaktikanta Das says Viksit Bharat by 2047 is achievable with 7.9 per cent growth · 4 October 2026
FPI sold Rs 45,536 crore in September as analysts seek stable rupee and yields · 4 October 2026

All Economy current affairs →

This note is generated automatically from SatyaDheesh's news feed and mapped to the UPSC CSE syllabus. Check facts against the original report or PIB before using them in an answer.