FPIs Withdraw ₹23,885 Crore from Indian Equities in September, Total 2025 Outflows Near ₹1.6 Trillion

Third Straight Month of FPI Outflows

Foreign Portfolio Investors (FPIs) continued to pare their exposure to Indian equities for the third consecutive month in September 2025, pulling out ₹23,885 crore. This follows significant outflows of ₹34,990 crore in August and ₹17,700 crore in July, taking the total equity outflow for the year to a massive ₹1,58,000 crore, according to data from depositories.

Global Headwinds and Policy Moves Trigger Sell-Off

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Analysts attribute the continued FPI withdrawal to a combination of global and domestic headwinds. The U.S. administration’s recent policy measures — including steep tariff hikes of up to 50% on Indian exports and a one-time $100,000 H-1B visa fee — have dampened investor sentiment, particularly toward export-dependent sectors such as IT. Additionally, the Indian rupee’s depreciation to record lows has raised concerns over currency risk, while the relatively high valuations of Indian equities have prompted global investors to rotate funds into other Asian markets offering better risk-adjusted returns.

An expert from a renowned Investment Research firm explained that FPIs have been cautious amid global uncertainty. “The combination of trade shocks, policy changes, and valuation pressures has led to sustained selling pressure,” he said. However, he added that a turnaround could emerge once clarity on tariffs, currency stability, and corporate earnings visibility improves.

Experts See Potential for Recovery Despite Uncertainty

Despite the persistent equity sell-off, some experts believe the outlook could improve in the coming quarters. According to an analyst, Indian market valuations have become more reasonable after recent corrections. A cut in GST rates and a pro-growth monetary policy stance could help revive foreign investor interest, he noted. He also emphasised that India continues to be the fastest-growing major economy globally, which could support long-term investment flows once short-term uncertainties ease.

In contrast to equities, debt markets witnessed a modest inflow from FPIs in September. Data shows that FPIs invested ₹1,085 crore under the general limit and an additional ₹1,213 crore through the voluntary retention route, indicating selective confidence in India’s fixed-income segment.

One of the expert pointed out that FPIs’ shift towards other emerging markets has, so far, worked in their favour. “Indian equities have underperformed most global markets over the past year, with one-year returns turning negative. Hence, FPIs have preferred reallocating funds to geographies showing stronger performance,” he said.

Conclusion

In the face of global volatility and policy uncertainty, the continuous FPI withdrawals underscore the short-term difficulties facing Indian stocks. Experts are cautiously hopeful that, in the medium term, stabilising macroeconomic conditions, higher valuations, and pro-Indian policy initiatives may help attract foreign investment.