The exodus of Overseas Portfolio Traders (FPIs) from Indian fairness markets continued unabated this month, with web outflows touching ₹22,272 crore until February 14, depositories information confirmed.
Taking collectively the web outflows of ₹78,027 crore in January 2025, the overall web withdrawal to date this calendar yr stood at ₹ 99,299 crore.
Apart from one session, FPIs remained web sellers all through the month, because the Trump commerce impact drove capital away from rising markets.
Regardless of the FPI’s sustained promoting spree, the Indian authorities stays unperturbed, viewing the development as a section of profit-booking slightly than an indication of misery. “Indian fundamentals stay robust, and most FPIs are exiting solely after reserving wholesome earnings,” official sources mentioned.
What’s Driving FPI Outflows?
The strengthening greenback and rising U.S. bond yields, triggered by Donald Trump’s return to the White Home, have made U.S. belongings extra enticing, resulting in capital flight from Indian equities.
In distinction to the heavy promoting in January and February 2025, FPIs had been web consumers of ₹15,448 crore in December 2024 however had offloaded ₹94,017 crore and ₹21,612 crore in October and November, respectively.
Skilled’s take
VK Vijayakumar, Chief Funding Strategist, Geojit Monetary Providers, mentioned, “Regardless of many constructive developments like a superb Finances, price reduce by the RBI and slight enchancment in Q3 outcomes, the FPIs continued to press gross sales. The full FPI promoting this month by February 14 stood at ₹23,242 crore within the money market. This takes the overall FPI promoting within the money market to ₹ 105145 crores in 2025”.
Since largecaps dominate the belongings below custody of FPIs, largecaps have been dealing with the brunt of FPI promoting. Relentless promoting in largecaps has made their valuations enticing, opening up alternatives for long-term buyers, Vijayakumar added.
“Reversal of FPI technique will occur when the greenback index strikes down. This may occur however we are able to’t predict when”, he mentioned.
Vipul Bhowar, Senior Director – Listed Investments, Waterfield Advisors, mentioned, “Current shifts in international insurance policies, particularly these rising from the U.S., are invoking a way of uncertainty amongst Overseas Portfolio Traders (FPIs), which in flip is reshaping their funding methods in dynamic markets like India”.
The attract of U.S. belongings has intensified, pushed by rising bond yields which have made these investments appear safer. This has led many FPIs to pivot away from Indian and different rising market shares, he mentioned.
Traders are more and more drawn to the promise of safer returns supplied by U.S. equities, leaving many markets, together with India, of their shadow.
Himanshu Srivastava, Affiliate Director—Supervisor Analysis, Morningstar Funding, mentioned that overseas portfolio buyers (FPIs) prolonged their promoting streak within the Indian fairness markets this previous week, marking the tenth consecutive week of web outflows.
The sustained exodus of overseas capital from Indian equities was pushed by a mixture of worldwide and home elements.
A serious catalyst was the escalation in international commerce tensions, which considerably weighed on investor sentiment. Market issues heightened following stories that U.S. President Donald Trump was contemplating imposing new tariffs on metal and aluminum imports, together with reciprocal tariffs on a number of nations. These developments reignited fears of a possible international commerce struggle, prompting FPIs to re-evaluate their publicity to rising markets, together with India.
Regardless of the current market correction, elevated valuations in Indian equities, particularly relative to different rising markets, would have most certainly prompted buyers to reallocate funds to extra attractively priced markets, contributing to the continuing sell-off, he mentioned.
One other vital issue driving outflows was the elevated U.S. bond yields, which boosted the enchantment of U.S. belongings, providing buyers a safer and better return different. In consequence, FIIs continued to withdraw from Indian equities in favour of U.S. markets, the place risk-adjusted returns appeared extra beneficial, he mentioned.
“These elements collectively fuelled FPI outflows in the course of the week, underlining the cautious stance adopted by overseas buyers amid prevailing international uncertainties and home challenges”, Srivastava added.
