Foreign investors pulled record ₹1.6L crore from equities in 2025
What's the story
Foreign investors have pulled out a record ₹1.6 lakh crore (around $18 billion) from Indian equities in 2025, while investing over ₹59,000 crore in the debt market. The unprecedented withdrawal was mainly triggered by volatile currency movements and global trade tensions, especially fears of US tariffs. Rising US bond yields, a strengthening dollar, and geopolitical uncertainties also shifted global capital toward developed markets away from emerging ones like India.
Outflow comparison
2025 surpasses previous record outflow
The massive outflow in 2025 has surpassed the previous record of ₹1.21 lakh crore set in 2022. This year is also a stark contrast to the marginal net inflow of just ₹427 crore seen in 2024 and the robust equity investment of ₹1.71 lakh crore recorded in 2023. The data highlights a significant shift in foreign portfolio investors' (FPIs) sentiment toward Indian equities over these years.
Future outlook
Reversal in foreign investment trend for 2026
Despite the outflow this year, market participants expect a reversal in 2026. Garima Kapoor of Elara Securities India said, "We expect FPIs to return sustainably in India as nominal growth and earnings pick up in CY26." She also added that the closure of a trade deal with the US could narrow tariff differentials while Federal Reserve rate cuts may keep the dollar soft, favoring emerging-market assets.
Domestic influence
Domestic factors expected to revive foreign investment flows
Vikas Gupta of OmniScience Capital has said domestic factors like Indian earnings growth relative to peers, policy continuity and reforms (especially around the Union Budget) could also play a role in reviving flows. However, uncertainty on the global macro front will continue to shape FPI behavior. Himanshu Srivastava from Morningstar Investment Research India stressed that global interest rates and tariff developments will be key drivers for future investments.