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.