This naturally raises an essential query: Ought to we be frightened about overseas cash leaving, or is India robust sufficient to resist such shocks?
On this article, we break down what these FPI outflows reveal concerning the energy and resilience of the Indian market.
FPI Promoting Development in 2025
Within the first seven months of 2025, Overseas Portfolio Traders (FPIs) offered practically Rs 95,642 crore value of Indian equities. 4 of those months noticed damaging flows, and the development has continued in August thus far. FPIs offered Rs 22,183 crore of equities (until August 18), increased than the Rs 17,741 crore outflow recorded in July 2025. On a year-to-date foundation, FPIs have offered Rs 1,17,825 crore value of equities. That is in stark distinction to 2024, when FPIs ended the yr as web consumers, with an influx of Rs 427 crore.
Within the main market, FPIs purchased Rs 2,579 crore within the first half of August 2025 in contrast with Rs 4,908 crore throughout the identical interval final month. Thus far this yr, they’ve invested Rs 38,814 crore, decrease than the Rs 54,884 crore invested within the first eight months of final yr.
These figures elevate the query: Can the Indian market keep robust as we enter the festive season, which normally brings optimistic momentum for buyers?
Why FPIs Are Pulling Out
Overseas Portfolio Traders are withdrawing from Indian markets in 2025 because of a mixture of world and home elements:
US-India Commerce Tensions: Escalating disputes over tariffs and commerce agreements have created uncertainty. The US proposal to impose a 25% tariff, with a further 25% penalty, on sure Indian exports triggered threat aversion amongst overseas buyers.
Weak Company Earnings: Disappointing Q1 outcomes for a number of Indian corporations raised considerations about profitability and development.
Rupee Depreciation: A weaker rupee makes returns much less enticing and will increase foreign money threat for overseas buyers.
Excessive US Curiosity Charges: Rising US Treasury yields have narrowed the yield hole between Indian and US property, making US investments comparatively extra interesting.
Valuation Considerations: Indian equities proceed to commerce at increased multiples than friends, prompting warning and profit-booking.
World Threat-Off/China Rotation: FPIs have rotated capital in direction of China and different markets providing decrease valuations, authorities assist, and tech-driven alternatives.
Impression of FPI Flows on Nifty
The hyperlink between Nifty’s efficiency and FPI exercise has been evident in 2025.
January: FPIs offered closely, pushing the Nifty down by practically 3.5% from the December 2024 shut of 23,644.80 to a January low of twenty-two,786.90. Whereas the index recovered a part of the autumn, it nonetheless ended the month with a small lack of 0.58%.
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February: The larger blow got here in February, when FPIs offered round Rs 34,574 crore value of equities. On the final buying and selling day alone, they offered Rs 11,639 crore, their worst single-day sell-off of the yr. Out of 20 buying and selling classes, FPIs have been sellers on 18 days. This dragged the Nifty down practically 5.90% for the month.
March–June: Regardless of some continued promoting in March, the quantities have been a lot smaller and simply absorbed. The Nifty stayed robust, closing positively for 4 straight months.
July: The damaging FPI development returned, and the Nifty ended the month decrease by 2.93%.
Why India’s Market Exhibits Resilience
Home institutional buyers (DIIs), together with mutual funds, insurance coverage corporations, and pension funds, have been essential in cushioning the affect of overseas promoting. Until August 18, that they had invested round Rs 4,78,414 crore, greater than 4 occasions the web FPI outflow. On a number of events, DII inflows even outpaced FPI outflows, serving to indices just like the Nifty and Sensex stay secure.
For the primary time, DII holdings in Nifty 500 corporations have overtaken overseas buyers’ holdings, marking a shift in direction of stronger home possession. Different supportive elements embody managed inflation, GDP development above 6%, authorities reforms in infrastructure and digitalisation and India’s latest credit standing improve by S&P.
Moreover, file SIP inflows and a surge in retail account openings have created a gradual stream of home capital, notably in mid-cap and small-cap shares. This displays robust religion amongst Indian buyers within the nation’s long-term development story, making them much less reactive to short-term world volatility.
Wrapping Up
Regardless of heavy FPI promoting, Indian markets haven’t suffered main declines; in reality, they’ve proven resilience and even gained in sure phases. The Independence Day announcement by PM Modi on GST fee cuts additional boosted sentiment, with buyers focusing extra on home positives than on overseas outflows.
It’s additionally essential to notice that FPIs aren’t absolutely exiting India. In August 2025 (until August 18), they invested Rs 6,066 crore within the debt basic restrict and Rs 138 crore within the debt voluntary retention route. They’ve additionally continued placing cash into the first market, whereas reserving earnings within the secondary market. In 2024, FPIs had invested over Rs 1,21,637 crore in main issuances.
Furthermore, FPIs at the moment maintain solely 18.8% of Indian equities, far beneath the 30% common in different rising markets (excluding China). This decrease base leaves ample room for overseas buyers to extend allocations sooner or later — which might present a robust enhance to the Indian market when sentiment turns beneficial.
(The creator is Vice President of Analysis, TejiMandi)
(Disclaimer: Suggestions, options, views, and opinions given by consultants are their very own. These don’t characterize the views of the Financial Instances)
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