Foreign institutional investors (FII) withdrew more than Rs 1.6 lakh crore from Indian equities in FY26 - the highest in a financial year - although a record Rs 8.5 lakh crore of fresh commitments from domestic funds formed the ideal rearguard against the potentially debilitating FII exits through the worst rupee rout in 14 years. For overseas buyers, Indian risk assets in FY26 appeared to have been caught in the perfect storm due to the Iran conflict, a lingering uncertainty on tariffs, relatively expensive valuations, an AI-led decline in the business prospects of a $280-billion technology industry, and about 10% rupee slide against the dollar.