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Trump Trade Effect: FPIs exit Indian equities at record pace, pull out ₹64,156 crore so far in January
The pace of FPI outflows has intensified in recent weeks, driven by a strengthening dollar and rising US bond yields following Donald Trump’s election as US President.
Dr.G.R.Balakrishnan Jan 28 2025 Exim & Trade News

Trump Trade Effect: FPIs exit Indian equities at record pace, pull out ₹64,156 crore so far in January

Foreign Portfolio Investors (FPIs) have maintained their relentless selling of Indian equities this month, with net outflows reaching ₹64,156 crore as of January 24, according to depository data.  In January 2025, FPIs remained net sellers on all days except January 2. 

The past week was the fourth straight week when FPIs remained net sellers in equities. On the debt markets front too, FPIs remained net sellers albeit at a lower level of ₹7,500 crore till January 24, depositories data showed.

In 2024, FPIs made net investments in Indian equities, albeit at a token level of ₹427 crore. This was significantly lower compared to the net investments of ₹1,71,107 crore in calendar year 2023.

K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said that the FPI selling through the exchanges has been continuing unabated.

The sustained strengthening of the dollar and rise in the US bond yields have been the principal factors driving the FPI selling, he said. “So long as the dollar index remains above 108 and the 10-year US bond yield remains above 4.5 per cent the selling is likely to continue”, Vijayakumar said.

Himanshu Srivastava, Associate Director – Manager Research, Morningstar Investment Research India, said that the exodus of foreign investments from the Indian equity markets continues unabated. In 2025 so far, they have now sold net assets worth $7.44 billion, he said, adding that this incessant selling by FPIs is driven by both global as well as domestic factors.

“The continued depreciation in Indian rupee is exerting significant pressure on foreign investors leading them to pull the money out of the Indian equity markets. In addition to that, higher valuation of Indian equities, despite recent corrections, expectation of a rather tepid earning season and macroeconomic headwinds are making investors wary”, Srivastava said. 

Moreover, unpredictable nature of Trump’s policies has also prompted investors to tread cautiously and prompting them to stay away from riskier investment avenues, he added. 

Meanwhile, a stronger US dollar along with rising US bond yields have dampened the appeal of Indian debt for FPIs even as India’s global bond inclusion narrative remains intact, according to fixed income market experts and economists.

After infusing a record ₹1.65 lakh crore into Indian debt markets last year—largely driven by India’s inclusion in JP Morgan’s Global Emerging Market Government Bond Index—Foreign Portfolio Investors (FPIs) have started the new year on a cautious note. They have offloaded government bonds worth ₹7,500 crore as of January 24, signalling a shift in preference toward safer US assets over Indian debt, according to experts.

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