Between January and September this year, foreign investors have pulled out ₹1.54 lakh crore from Indian equities
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Mumbai
Foreign Portfolio Investors (FPIs) withdrew ₹23,885 crore from Indian stocks in September, making it the third consecutive month of net outflows from the Indian stock market, according to data from the National Securities and Depositories Ltd. (NSDL).
FPIs have been withdrawing money from the Indian stock market since September 2024, on and off. To be sure, the calendar year began with a net flow of more than ₹78,000 crore in January 2025 after which there were two consecutive months of outflows. This was followed by moderate inflows in April, May and June 2025.
Sentiments were pessimistic even in calendar year 2024, with the highest ever outflows in October going as high as ₹94,000 crore.
Despite this, FPIs had a net inflow of ₹1 lakh crore as of September 2024.
However, between January and September this year, foreign investors have pulled out ₹1.54 lakh crore from Indian equities, making it worse than the previous year.
Some analysts cite short-term reasons like the uncertainty in tariffs, while others say that dull earnings of companies for multiple quarters and disproportionately high valuations have made these stocks unattractive. The increasing rupee depreciation makes the dollar returns smaller.
According to a report by Elara Capital, managers of emerging market funds have cut India allocation to 16.7%, which is the worst since November 2023.
India constituted 21% of their allocation in September 2024. These funds are instead moving to China.
“Active global emerging market (GEM) managers remain net sellers of India {stocks], continuing to rotate towards China. India’s allocation in GEM funds peaked at 21% in September 24 but has since fallen sharply to 16.7% [lowest since November 23]. In contrast, China’s allocation has climbed to 28.8%, marking a decisive reversal in positioning,” according to Elara’s report.
As of August 2025, global funds held $390 billion in Indian assets. Of these, funds with high conviction in India’s long-term growth have been withdrawing from the country. This is the first such instance since April 2018 and “raises questions about the strength and sustainability of foreign investor conviction in India’s medium-term growth story,” says another report by Elara.
Domestic markets
Returns in domestic markets have also been dull. For instance, Nifty50 index was down 4.6% to 24,611.1 points on September 1, 2025, from 25,810.85 on the same day last year.
Analysts say that FPI flows will continue to be volatile given the H1-B visa fee hike, the 100% U.S. tariff on branded pharmaceuticals, and a ramp up in Chinese investments in AI.
Published – September 30, 2025 10:54 pm IST
