FPI outflows: Foreign portfolio investors continue as net sellers; withdraw over Rs 22,500 crore

Foreign portfolio investors (FPIs) have pulled out more than Rs 22,530 crore ($2.5 billion) from Indian equities so far this month, continuing a trend of heavy selling that began last year. Back in 2025, FPIs recorded an outflow of Rs 1.66 lakh crore ($18.9 billion), driven by currency volatility, global trade tensions, potential US tariffs, and high market valuations. According to NSDL data, the latest withdrawals between January 1 and 16 reflected the sustained pressure on Indian markets from overseas investors. Market analysts say the outflows are being influenced by both international and domestic factors. “Rising US bond yields and a stronger dollar have improved risk-adjusted returns in developed markets, prompting capital reallocation away from emerging markets,” Sachin Jasuja, Head of Equities and Founding Partner at Centricity WealthTech told PTI. Himanshu Srivastava, principal-manager research at Morningstar Investment Research India, said the appeal of US assets has increased due to elevated bond yields and a strong dollar. He further said that the ongoing geopolitical and trade uncertainties are dragging down investor appetite for emerging markets.V K Vijayakumar, chief investment strategist at Geojit Investments, highlighted that the persistent uncertainty over US-India trade agreement is another factor affecting sentiments. He noted that rich valuations in some segments, combined with mixed earnings-season signals, have led foreign investors to take profits and rebalance portfolios. Meanwhile, rupee’s depreciation, which fell nearly 5% in 2025 and recently touched around 90.44 per dollar, has further diminished returns for dollar-based investors, adding to FPI outflows. Vijayakumar warned that the selling pressure may continue until clear triggers for a sustained rally emerge. He also pointed out that AI-driven trading trends that dominated 2025 have persisted into early 2026, although a reversal could be seen later in the year.