Over the last 12 months, the Indian primary markets have seen FII net inflows to the tune of Rs 823 billion ($9.5 billion) while secondary markets have seen FII net outflows of Rs 2,144 billion ($24.5 billion), according to a note by JM Financial.
New Delhi:Foreign investors pulled out Rs 17,955 crore from Indian equities in the first two weeks of this month, taking the total outflow to Rs 1.6 lakh crore in 2025. This sharp withdrawal follows a net outflow of Rs 3,765 crore in November, extending the pressure on domestic equity markets.
The current trend comes after a brief pause in October, when Foreign Portfolio Investors infused Rs 14,610 crore,snapping a three-month streak of heavy withdrawals.
FPIs sold equities worth Rs 23,885 crore in September, Rs 34,990 crore in August, and Rs 17,700 crore in July.
According to data from the National Securities Depository Ltd, FPIs withdrew a net Rs 17,955 crore from Indian equities between December 1-12.
The domestic institutional investors (DII) have bought Rs 39,965 crore of shares during this period.
Market experts attributed this sustained outflow to several factors including sharp depreciation of the rupee and rich Indian valuations.
A healthy feature of the investment behaviour of retail investors is the steady inflows into mutual fund SIPs, which have been consistently above Rs 29,000 crore during the last three months.
SIP inflows in November remained almost steady at Rs 29,445 crore, according to data released by the Association of Mutual Funds in India (AMFI).
According to VK Vijayakumar, Chief Investment Strategist, Geojit Investments Ltd., this has enabled the DIIs to absorb the sustained selling by FIIs.
“FIIs have been sustained sellers in December, so far, selling on all days. It would be difficult for the FIIs to sell continuously and maintain a high short position in the market in the context of healthy SIP inflows, particularly when the economy is doing well and the prospects for earnings growth are improving,” he noted.
According to analysts, it is also important to understand that rupee depreciation, sustained FII selling, delay in the finalisation of US-India trade deal and the ongoing AI trade are all temporary drags on the markets.
In November, both FIIs and DIIs were net buyers (to the tune of $40 million and $8.7 billion, respectively) in the Indian equity market.
Over the last 12 months, the Indian primary markets have seen FII net inflows to the tune of Rs 823 billion ($9.5 billion) while secondary markets have seen FII net outflows of Rs 2,144 billion ($24.5 billion), according to a note by JM Financial.
In November, India’s weight in the MSCI Emerging Markets Index was 15.8 per cent against 15.2 per cent in October and 19.9 per cent in November.
The most important factor that will dictate the direction of the market is the earnings growth, and this looks promising for FY27, said analysts, .
Explaining the outflow caused by FIIs, Himanshu Srivastava, Principal Manager Research at Morningstar Investment Research India, said elevated US interest rates, tighter liquidity conditions, and a preference for safer or higher-yielding developed-market assets have weighed on investor sentiment.
Adding to the pressure, India’s relatively rich equity valuations have made it less attractive compared to other emerging markets that currently offer better value, he added.
In addition to these concerns, Vaqarjaved Khan, Senior Fundamental Analyst at Angel One, pointed to weakness in the Indian rupee, global portfolio rebalancing, year-end effects, and lingering macroeconomic uncertainty as key reasons behind the continued pullout.
Despite this persistent foreign selling, the impact on markets has been largely offset by strong domestic institutional investor participation. DIIs invested Rs 39,965 crore during the same period, effectively eclipsing FPI outflows. Looking ahead, some market experts believe the selling pressure may ease.
VK Vijayakumar, Chief Investment Strategist at Geojit Investments, noted that sustained selling appears unsustainable given India’s strong growth and earnings outlook, suggesting that FPI selling is likely to decline going forward.
Khan added that an expedited US-India trade deal could potentially trigger a reversal in foreign investment trends. Meanwhile, in the debt market, FPIs withdrew Rs 310 crore under the general limit but invested Rs 151 crore through the voluntary retention route during the same period.