FPI withdrawal in 2024-25 marks second-largest annual equity outflow on record amid global uncertainty, says SEBI

Following a year of record inflows, FPIs withdrew a net amount of Rs 1.27 trillion from the Indian equity segment during 2024-25, SEBI stated in its annual report for 2024-25. This marks the second-largest annual equity outflow on record, surpassed only by the withdrawals in 2021-22. The reversal in FPI sentiment was driven by escalating global uncertainties, including rising reciprocal trade tensions, elevated U.S. bond yields and a weakening corporate earnings outlook, all of which adversely affected investor confidence, SEBI noted.

Despite sustained outflows from equities, FPIs remained active in the debt segment, registering robust net inflows of Rs 1.4 trillion. The overall net FPI inflows across equity, debt, and hybrid instruments stood at a modest Rs 0.2 trillion in 2024-25, a significant decline from the Rs 3.4 trillion recorded in the previous fiscal year. Domestic institutional investors (DIIs) provided a strong counterbalance to foreign outflows in the equity market, the exchange board noted. DIIs invested a record Rs 6.0 trillion during the fiscal year, with mutual funds accounting for approximately 86 per cent of the total. This trend highlights the growing maturity and resilience of domestic institutions, which continue to play a stabilising role during periods of foreign divestment.

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