FPIs pull ₹11,820 cr in first week of Dec, total outflow reaches ₹1.55 trn

Foreign investors have pulled out ₹11,820 crore ($1.3 billion) from Indian equities in the first week of this month, primarily driven by the sharp depreciation of the rupee.

This sharp withdrawal follows a net outflow of ₹3,765 crore in November, further pressuring markets.

These outflows come after a brief pause in October, when FPIs invested Rs 14,610 crore, breaking a three-month streak of massive withdrawals -- Rs 23,885 crore in September, Rs 34,990 crore in August, and Rs 17,700 crore in July.

According to NSDL data, foreign portfolio investors (FPIs) withdrew a net amount of Rs 11,820 crore from Indian equities in the first week of this month. This takes the total outflow for 2025 to Rs 1.55 trillion ($17.7 billion).

Analysts attribute the renewed selling primarily to currency concerns.

The rupee has depreciated nearly 5 per cent this year, prompting FPIs to pull out during such periods, said VK Vijayakumar, Chief Investment Strategist at Geojit Investments.

Adding to this, year-end portfolio repositioning by global investors, a typical December trend before the holiday season, has also intensified selling, noted Vaqarjaved Khan, Senior Fundamental Analyst at Angel One.

Khan said delays in finalising the India-US trade deal have further dampened global sentiment.

However, despite the FPI exodus, the impact on markets has been cushioned by strong domestic participation. Domestic Institutional Investors (DIIs) bought equities worth Rs 19,783 crore during the same period, completely offsetting the foreign selloff, Vijayakumar said.

DII confidence has been supported by India's robust GDP numbers and expectations of an improvement in corporate earnings ahead.

The sentiment received an additional boost after the RBI's 25-bps rate cut on December 5, when FPI flows turned positive for the day at Rs 642 crore.

This shift was significant, considering FPIs had sold nearly Rs 13,000 crore by December 4.

"The RBI not only reduced rates but also raised its FY26 growth guidance to 7.3 per cent, while cutting its CPI forecast to 2 per cent. A strong growth environment augurs well for Indian equities," Khan said.

Looking ahead, global liquidity may get another lift. The CME Fed Watch Tool indicates that the FOMC is expected to cut rates by 25 bps next week, a move that typically benefits risk assets worldwide, he said.

India, he said, could be a key beneficiary, though the absence of a concluded India-US trade deal remains a risk factor.

Meanwhile, in the debt market, FPIs invested Rs 250 crore under the general limit while withdrawing Rs 69 crore through the voluntary retention route during the same period.