FPIs turn net sellers, withdraw ₹13,550cr in last 5 days
What's the story
Foreign portfolio investors (FPIs) have been on a selling spree for five consecutive sessions, withdrawing ₹1,980 crore from the Indian stock market yesterday. This outflow takes their total withdrawal over the last five days to ₹13,551 crore and monthly outflows to ₹30,562 crore. After three months of consistent buying, FPIs have turned net sellers in July due to uncertainty over the India-US trade deal and stretched valuations.
Market resilience
Resilience of Indian equity market
Despite FPIs being net sellers in 12 of July's 19 trading sessions, the Indian stock market has remained resilient. This is mainly due to strong buying from domestic institutional investors (DIIs), especially mutual funds. According to exchange data, DIIs have bought ₹37,687 crore worth of Indian equities in July alone. They have been net buyers since August 2023, and their total investments are set to cross the ₹4 lakh crore mark in just seven months of 2025.
Market triggers
Rally in Indian equities raises valuation concerns
The turnaround in FPI sentiment in April and May was largely due to improved earnings visibility and other factors. However, the strong rally in the Indian stock market has raised valuation concerns once again. A weak start to the June quarter earnings season, particularly for IT stocks and some banking names, has further fueled expectations of a subdued quarter for India Inc.
Future outlook
Only 50% of Nifty companies have beaten estimates so far
So far, only 50% of the 12 Nifty companies that have declared Q1 results have beaten analyst estimates, according to Bloomberg. This is much lower than the previous quarter, when over 58% had beaten expectations at this stage of the results season. Analysts believe improved earnings visibility and clarity on the India-US trade deal are crucial for FPI sentiment. They also say a potential rate cut due to continued moderation in inflation could further support market sentiment.