FPIs withdrew net Rs 1.27 lakh crore from equities in FY25, investor sentiment remains cautious

Annual report of Securities & Exchange Board of India (SEBI), stated that Foreign Portfolio Investors (FPIs) withdrew a net amount of Rs 1.27 lakh crore from the Indian equity segment during 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 US bond yields and a weakening corporate earnings outlook, all of which adversely affected investor confidence. Despite sustained outflows from equities, FPIs remained active in the debt segment, registering robust net inflows of Rs 1.4 lakh crore. It noted that looking ahead, tighter global financial conditions are expected to continue placing downward pressure on portfolio flows. Investor sentiment remains cautious, with a prevailing risk-off approach toward emerging market assets. Nevertheless, the ongoing reconfiguration of global value chains and the realignment of trade flows are expected to unlock new structural investment opportunities in select emerging economies.

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