Foreign portfolio investors have sold shares worth about Rs 1.58 lakh crore so far this year. (symbolic photo)
highlights
- FPIs withdrew Rs 1.58 lakh crore from equity markets, according to depository data
- Whereas FPIs invested more than Rs 59,000 crore in the debt market.
- Know what will be the attitude of FPIs in Indian stock market in 2026
Trend may change in 2026
According to PTI, rising US bond yields, a strong dollar and concerns over geopolitical uncertainties diverted global capital away from emerging markets like India towards developed markets. Despite the weak performance this year, market experts expect the trend to reverse in 2026. “We expect FPIs to make a permanent return to India as nominal growth and earnings pick up in CY26. The trade deal with the US will narrow the tariff gap, while the Fed rate cut will keep the dollar soft, which will be beneficial for emerging market assets,” said Garima Kapoor, economist and deputy head of research at Elara Securities India.
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Big signal can be given from the budget
Apart from global positive cues, domestic factors are also expected to play a role in resumption of flows. Vikas Gupta, CEO and Chief Investment Strategist, Omniscience Capital, said Indian earnings growth compared to other countries, policy continuity and reforms, especially around the Union Budget, could act as key triggers. Also, uncertainty on the global macro front will continue to impact the behavior of FPIs.
Developments on tariffs will be the key driver
“The path of global interest rates, particularly the timing and pace of rate cuts, as well as developments on tariffs, will be key drivers,” said Himanshu Srivastava, principal manager-research, Morningstar Investment Research India. He said a decline in US bond yields and a soft dollar could further support the improvement in equity inflows.
Know what the figures are telling so far
So far, according to data available with depositories as of December 26, foreign portfolio investors (FPIs) have pulled out Rs 1.58 lakh crore from Indian equity markets, while infused over Rs 59,000 crore in the debt market. This will make 2025 the worst year for equity flows, surpassing the previous record outflow of Rs 1.21 lakh crore in 2022, leaving only a modest net inflow of Rs 427 crore in 2024. In contrast, 2023 saw strong equity inflows of Rs 1.71 lakh crore.
Explaining the reasons for this, experts point to a mixture of global and local pressures. Srivastava said, “Persistently high US interest rates and elevated bond yields improved risk-free returns in developed markets, leading to capital rotation and a stronger dollar, making financial conditions favorable for emerging markets. The rupee’s depreciation phases further depressed dollar-based returns and raised hedging costs, reducing India’s risk-adjusted appeal.
On the domestic front, elevated valuations in some segments led to strategic profit-booking, said Sorabh Gupta, head of equities at Bajaj Finserv Asset Management, adding that these were short-term adjustments rather than a reassessment of India’s long-term growth story.
Foreign investors sold in eight months out of 12.
Monthly flow patterns reflect this instability. FPIs sold equities in eight of the 12 months in 2025, with purchases limited to April, May, June and October. Equity selling by FPIs was supported by strong buying by domestic institutional investors, supported by rising systematic investment plan (SIP) inflows from retail investors.
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