MOHAMMAD ZIYAUDDIN
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Foreign Portfolio Investors (FPIs) have pulled out ₹34,574 crore from Indian equities in February 2025, bringing the total outflows to a staggering ₹1.12 lakh crore in the first two months of the year. The sell-off is driven by rising global trade tensions, corporate earnings concerns, and elevated stock valuations.
Key Highlights of FPI Sell-Off in 2025
February 2025 Outflows: ₹34,574 crore
January 2025 Outflows: ₹78,027 crore
Total FPI Outflows in 2025: ₹1,12,601 crore
Sensex Decline: Over 6% year-to-date
According to depository data, FPIs have been consistently selling off Indian stocks, leading to major market corrections.
Why Are Foreign Investors Pulling Out?
According to Vipul Bhowar, Senior Director – Listed Investments, Waterfield Advisors, FPIs are withdrawing from India due to:
High Valuations of Indian Equities – Indian stocks are trading at premium valuations, making them less attractive.
Weak Corporate Earnings Growth – The Q3 FY2025 earnings reports have been modest, creating uncertainty.
Strengthening US Dollar & Rising Bond Yields – Investors are shifting focus to US assets, reducing emerging market exposure.
Falling Commodity Prices & Reduced Consumer Spending – Lower demand is hitting corporate profits, making Indian stocks less appealing.
V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services, pointed out a paradox in FPI behavior:
“FPIs are selling in financial services, which is the best-performing sector with attractive valuations. They are shifting money to Chinese stocks, where valuations are much lower.”
FPIs Exit Debt Market Too
Foreign investors have also pulled out ₹11,598 crore from the Indian debt market, including:
₹8,932 crore from the Debt General Limit
₹2,666 crore from the Debt Voluntary Retention Route (VRR)
This signals a broader shift in investment strategy, with FPIs reducing their exposure to both equities and debt in India.
How Does This Compare to Previous Years?
The sharp FPI outflow in 2025 follows a year of low foreign inflows in 2024:
2025 (Jan-Feb): ₹1.12 lakh crore outflow
2024 (Full Year): ₹427 crore net inflow
2023 (Full Year): ₹1.71 lakh crore net inflow
2022 (Full Year): ₹1.21 lakh crore net outflow (due to global rate hikes)
In 2023, FPIs were bullish on India, driven by strong economic fundamentals, but sentiment has shifted dramatically in 2025.
What’s Next for Indian Markets?
- Will the sell-off continue? If global uncertainties persist, FPIs may keep pulling out funds.
- Can Indian markets bounce back? Domestic investors and institutional support will be crucial.
- What about other emerging markets? FPIs are moving funds to China, where stock valuations are cheaper.
