FPI Selling Persists: Rs 11,820 Crore Sold in First Week of December, Total Outflow Reaches Rs 1.55 Lakh Crore in 2025

Foreign investors have kicked off December with a significant withdrawal from Indian equities, pulling out ₹11,820 crore in just the first week. This trend follows a brief period of investment in October, where foreign portfolio investors (FPIs) had infused ₹14,610 crore after three months of heavy selling. The recent outflow is largely attributed to a sharp decline in the value of the Indian rupee, which has lost nearly 5% of its value this year, prompting FPIs to adopt a more cautious approach. Analysts suggest that this retreat reflects ongoing stress in the currency market, compounded by seasonal portfolio adjustments typically seen at the end of the year.

Foreign Portfolio Investors Retreat

The recent withdrawal of ₹11,820 crore by foreign portfolio investors marks a stark reversal from their brief return to the Indian market in October. Prior to this, FPIs had offloaded substantial amounts—₹17,700 crore, ₹34,990 crore, and ₹23,885 crore—over the previous three months. The net outflow in November was ₹3,765 crore, indicating a troubling trend that has accelerated into December. According to data from the National Securities Depository Limited (NSDL), total equity outflows for 2025 have now reached ₹1.55 lakh crore. This pattern of withdrawal is closely linked to the depreciation of the rupee, which has made foreign investors more risk-averse. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, noted that FPIs often withdraw funds during periods of currency depreciation, a trend that is currently evident.

Domestic Investors Step In

Despite the significant foreign selloff, domestic institutional investors (DIIs) have stepped up to fill the gap, purchasing equities worth ₹19,783 crore during the same period. This influx of domestic capital has helped to counterbalance the foreign withdrawals. Analysts attribute this resilience to a strong belief in India’s economic growth and positive expectations regarding corporate earnings. The contrasting behaviors of FPIs and DIIs highlight the complexities of the current market environment. While foreign investors are retreating due to currency concerns and global uncertainties, domestic investors remain optimistic, suggesting a divergence in market sentiment.

Impact of Monetary Policy Changes

A notable shift occurred on December 5, when the Reserve Bank of India (RBI) announced a 25-basis point rate cut. This decision briefly reversed the trend of foreign selling, resulting in a net inflow of ₹642 crore for that day, despite FPIs having sold nearly ₹13,000 crore by December 4. The RBI’s move not only aimed to stimulate growth but also raised its growth forecast for FY26 to 7.3%, while lowering its Consumer Price Index (CPI) forecast to 2%. Analysts believe that a robust growth environment is favorable for Indian equities, even as uncertainties linger regarding the India-US trade deal.

Global Market Influences

Attention is now shifting towards the global monetary landscape, particularly with expectations that the Federal Open Market Committee (FOMC) will cut rates by 25 basis points in the upcoming week. Such a move typically boosts risk assets across various markets, potentially benefiting India. However, the lack of a finalized India-US trade agreement continues to cast a shadow of uncertainty over investor sentiment. In the debt market, FPIs have shown a mixed response, deploying ₹250 crore under the general limit while withdrawing ₹69 crore through the voluntary retention route. This complex interplay of domestic and foreign investment dynamics will be crucial to watch as the year progresses.

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