Foreign portfolio investors (FPIs) have withdrawn equities worth over Rs 1 lakh crore from Indian markets in the first two months of 2025, according to data released by the National Securities Depository Limited (NSDL). The total FPI outflows so far this year stand at Rs 1,01,737 crore, marking a significant capital flight from the country’s stock market.
Declining selling intensity
Between February 17 and February 21, FPIs sold equities worth Rs 2,437.04 crore. This represents a slowdown in selling intensity compared to the previous week when foreign investors offloaded Rs 13,930.48 crore worth of equities. The reduced selling pressure has been attributed to bulk deal investments in Bharti Airtel shares, which provided some relief to the market.
In February alone, FPIs have offloaded Rs 23,710 crore worth of equities. This follows a sharp selling spree in January when foreign investors withdrew Rs 78,027 crore. In contrast, December 2024 ended on a positive note, with a net FPI investment of Rs 15,446 crore. However, despite a strong end to 2024, FPI net buying value in Indian equities had already significantly reduced, dropping to just Rs 427 crore.
Key factors behind the selloff
Market experts cite multiple reasons for the continued selling pressure. Global uncertainties, rising US bond yields, and geopolitical tensions have contributed to investor caution. A major factor driving capital away from emerging markets like India is the renewed political influence of Donald Trump in the United States. His return to the political stage has strengthened investor confidence in the US economy, making it a more attractive investment destination.
Impact on markets
As foreign investors shift towards safer assets, emerging markets, including India, have experienced significant outflows. India, in particular, saw a drastic drop in FPI inflows in 2024, with net investments falling by 99% compared to the previous year. Analysts warn that unless global economic conditions stabilise, the FPI outflows may continue to weigh on the Indian stock market.
(With ANI inputs)
