India's share market faced a record wave of foreign selling in 2025, but local investors kept the indices moving higher.
Record foreign outflow
Foreign portfolio investors sold about 1.6 trillion rupees (roughly $18 billion) of Indian stocks this year – the biggest yearly outflow ever recorded.
The sell‑off was driven by high stock valuations, weaker earnings outlook, worries about U.S. tariffs on Indian exports, and global geopolitical tensions.
Tech stocks felt the brunt
Information‑technology shares, which make up almost half of the foreign outflows, fell hardest. Slow client spending and uncertainty in the United States, a key market for Indian IT firms, reduced demand.
Domestic buying cushioned the blow
Even as foreign ownership slipped to a 15‑year low of 16.9%, Indian mutual funds increased their stake to a record 10.9%.
Strong buying from local investors helped the Nifty 50 and Sensex each gain about 10% in 2025, despite under‑performing many Asian peers.
What could change in 2026?
Analysts expect foreign interest may return next year if valuations come down, earnings stabilize, and the growth outlook remains solid.
Additional factors such as higher government spending, easing inflation, progress on a trade deal, and possible U.S. rate cuts could also attract more overseas money.
Key takeaway
2025 reminded markets to stay cautious, but robust domestic participation prevented a sharper decline.
Remember, this is just perspective, not a prediction. Do your own research before making any investment decisions.