FPIs Continue To Dump Indian Equities In Jan So Far, Find Out Why

The ‘unpredictable nature of Donald Trump’s policies’ has also led investors to act more wary and prompted them to stay away from riskier investment avenues, experts noted.

In the month so far, the FPIs withdrew Rs 4,399 crore from the debt general limit and Rs 5,124 crore via debt voluntary retention route (VRR).

Source : ABPLIVE AI

Foreign portfolio investors (FPIs) continued to withdraw from the Indian equity markets. The investors pulled out Rs 64,156 crore from the markets in January so far, official data from the depositories revealed. Meanwhile, the infusion from the investors in December stood at Rs 15,446 crore.

This outflow was attributed to the depreciation of the rupee, an increase in the US bond yields, and anticipations of a weak earnings season, reported PTI. The data for the month includes the fund flows recorded till January 24, 2025.

Explaining the outlook of the FPIs, Himanshu Srivastava, Associate Director - Manager Research, Morningstar Investment Advisers India, noted, “The shift in sentiment comes amid global and domestic headwinds. The continued depreciation in Indian rupee is exerting significant pressure on foreign investors leading them to pull the money out of the Indian equity markets.”

He explained that investors are being more cautious due to the surging valuation of Indian equities and macroeconomic headwinds. Further, the ‘unpredictable nature of Donald Trump’s policies’ has also led investors to act more wary and prompted them to stay away from riskier investment avenues. 

V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, stated, “The sustained strengthening of the dollar and rise in the US bond yields have been the principal factors driving the FII selling. So long as the dollar index remains above 108 and the 10-year US bond yield remains above 4.5 per cent, the selling is likely to continue.”

The analysts noted that the financial sector has been facing the major impact of FPI selling, while the IT sector has seen significant buying from investors. The debt market has also seen selling from the investors amidst lucrative US bond yields.

In the month so far, the FPIs withdrew Rs 4,399 crore from the debt general limit and Rs 5,124 crore via debt voluntary retention route (VRR).