FPIs withdraw nearly ₹85,370 crore from Indian equities in 2025
What's the story
Foreign portfolio investors (FPIs) have pulled out a whopping ₹85,369 crore from Indian equities since the start of 2025.
The trend marks a stark contrast to the net inflows seen in December 2024 and has accompanied a steep fall in Indian stock markets.
The broader indices have been especially hit by the exodus, owing to global economic uncertainties and high domestic valuations.
Market impact
FPIs withdrawal impacts Indian equities
The massive withdrawal by FPIs has taken a toll on the Indian market, especially Sensex and Nifty, the broader indices.
In February 2025 alone, FPIs have withdrawn ₹7,342 crore after a mammoth ₹78,027 crore outflow in January.
The continuous sell-off has dragged Indian equities down by over 1% YTD, with the Nifty Midcap index falling by over 9%.
FPIs had offloaded ₹21,612 crore in November 2024 and a record ₹94,017 crore in October.
Future outlook
Market sentiment remains under pressure
The FPI sell-off is likely to continue as market sentiment remains under pressure, mainly due to US President Donald Trump's tariff policies.
Weak corporate earnings have also added to the ongoing correction in the Indian stock market.
Despite a slight improvement in Q3 earnings compared to previous quarters, they have failed to boost investor sentiment.
Analyst views
Analysts express caution over FPI trends
However, analysts remain cautious about future FPI trends, given expensive valuations and macroeconomic headwinds.
Dr. V.K. Vijayakumar of Geojit Financial Services predicts that FIIs are likely to continue selling rallies, limiting potential upside in Indian equities.
He emphasizes that valuations in the broader market remain stretched and require fundamental catalysts such as GDP growth and earnings revival for a sustained market uptrend.
Market volatility
FPI flows expected to remain volatile
Kotak Securities' Shrikant Chouhan expects FPI flows to remain volatile as the Q3FY25 earnings season largely met muted expectations, with management commentary remaining lackluster overall.
He also notes that market volatility was exacerbated by frequent shifts in US government tariff policies.
Chouhan reveals that FPI outflows were recorded across most key emerging markets in February 2025, except for the Philippines and Thailand.