Foreign investors withdrew a significant ₹7,945 crore from Indian stock markets throughout September. This substantial pullout was primarily influenced by mounting global uncertainties, including ongoing tariff disputes and persistent geopolitical tensions.
This latest move follows substantial outflows of ₹34,990 crore in August and another ₹17,700 crore in July. Cumulatively, this brings the total equity sell-off by Foreign Portfolio Investors (FPIs) in 2025 to a staggering ₹1.38 lakh crore, as per official depository data.
Looking ahead, market analysts anticipate that critical macroeconomic data releases from both India and the United States, alongside any progress in crucial tariff negotiations, will be the primary factors steering FPI investment flows in the coming week.
Despite remaining net sellers in September, with total equity outflows reaching ₹7,945 crore by September 19, there was a notable moderation in the intensity of their selling. In fact, for a brief period during the most recent week, FPIs even turned net buyers, injecting ₹900 crore into equities after the U.S. Federal Reserve implemented a 25 basis point interest rate cut.
“During the current week FPIs bought Indian equities valued at ₹900 crore on the back of the Fed’s rate cut. With two additional rate cuts anticipated in 2025, global market liquidity could see a substantial improvement. Nevertheless, FPIs continued to be net sellers throughout September,” explained Vaqarjaved Khan, a Senior Fundamental Analyst at Angel One Ltd.
Himanshu Srivastava, Principal, Manager Research at Morningstar Investment Research India, observed a “modest but discernible return” of foreign investors to Indian equities during the week.
He attributed this shift in sentiment to the Fed’s accommodating stance, coupled with a reduction in U.S.-India trade tensions and India’s generally stable macroeconomic outlook. However, Srivastava cautioned that ongoing global uncertainties and geopolitical risks continue to foster a cautious approach to capital flows.
Supporting this perspective, V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services, highlighted that the selling by Foreign Institutional Investors (FIIs) in India coincided with increased buying activity in other Asian markets, specifically Hong Kong, Taiwan, and South Korea. He noted that this strategy has proven profitable so far this year but suggested, “This scenario may change going forward.”
In contrast to the equity market, debt markets experienced an inflow of capital. FPIs invested approximately ₹900 crore under the general limit and an additional ₹1,100 crore through the voluntary retention route.