FPIs pull out ₹12,257cr from Indian equities this month
What's the story
Foreign Portfolio Investors (FPIs) have pulled out ₹12,257 crore ($1.4 billion) from Indian equities in the first week of September. The withdrawal was mainly due to a stronger dollar, US tariff concerns, and ongoing geopolitical tensions. This comes after a net outflow of ₹34,990 crore in August and ₹17,700 crore in July.
Cumulative impact
Total FPI outflow in equities at ₹1.43L crore
The latest withdrawal has pushed the total FPI outflow in equities to ₹1.43 lakh crore so far in 2025, data from depositories shows. Looking ahead, FPI flows are likely to be influenced by US Federal Reserve commentary, labor market data, expectations of RBI rate cuts, and its stance on rupee stability.
Future prospects
Structural growth story could attract FPIs back
Despite the near-term volatility, India's structural growth story, policy reforms like GST rationalization, and expectations of an earnings revival might lure FPIs back once global uncertainties subside. This was stated by Himanshu Srivastava from Morningstar Investment. He also noted that multiple factors including a stronger dollar and renewed US tariff threats contributed to this risk-off sentiment amid continuing geopolitical tensions.
Market dynamics
High valuations prompt FPIs to book profits
Domestically, the slowing corporate earnings momentum and fears of high valuations, Indian equities continue to trade at a premium over other emerging markets, prompted FPIs to book profits and lower exposure. VK Vijayakumar from Geojit Investments said sustained massive DII buying is enabling FPIs to encash at high valuations and invest in cheaper markets like China, Hong Kong, South Korea.