FPIs withdraw ₹23,885 cr in Sep, total outflow reaches ₹1.6 trn in 2025

Foreign portfolio investors (FPIs) remained net sellers of Indian equities in September, withdrawing ₹23,885 crore (around $2.7 billion) and taking year-to-date outflow to ₹1.58 trillion ($17.6 billion).

This marks the third consecutive month of withdrawals, following heavy outflows of ₹34,990 crore in August and ₹17,700 crore in July, data from depositories showed.

The latest selling was driven by multiple factors, like US trade and policy shocks -- steep tariff hikes of up to 50 per cent on Indian goods and a one-time $100,000 H-1B visa fee, which hurt sentiment toward export-oriented sectors, especially IT, Himanshu Srivastava, Principal, Manager Research, Morningstar Investment Research India, said.

 

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The rupee's fall to a record low level also added currency risk, while relatively high valuations of Indian equities prompted rotation to other Asian markets, he added.

Despite the ongoing sell-off, some analysts believe conditions may gradually turn in India's favour.

Vaqarjaved Khan, Senior Fundamental Analyst at Angel One, noted that valuations have now become more reasonable and that factors, such as a cut in GST rates and a pro-growth monetary policy, could help rekindle foreign interest.

"India remains the fastest-growing major economy globally," Khan said, adding that the upcoming earnings season and macroeconomic data will play a key role in determining FPI flows in the near term.

Echoing this, Srivastava pointed out that a sustained FPI turnaround will hinge on tariff clarity, currency stabilisation, earnings visibility, and a supportive global rate environment. If these factors improve, India's strong structural growth story could draw foreign investors back selectively.

Meanwhile, debt markets witnessed net inflow, FPIs invested about Rs 1,085 crore under the general limit and Rs 1,213 crore through the voluntary retention route in September.

VK Vijayakumar, Chief Investment Strategist at Geojit Investments, observed that FPIs' strategy of shifting funds from India to other markets has so far yielded better returns, as Indian equities have underperformed most global markets over the past year, with one-year returns in negative territory.