Foreign investors have pulled a record amount of money out of Indian stocks this year, yet Indian markets keep climbing thanks to strong local buying.
Record FPI Outflows in 2025
By December 27, foreign portfolio investors (FPIs) sold about ₹22,130 crore of Indian shares, marking their sixth straight month of selling. The total secondary‑market outflow for the year now stands at roughly ₹2,31,990 crore.
Even though FPIs bought ₹73,583 crore of new shares in the primary market, the overall net outflow for the year is still around ₹1,58,407 crore – the biggest annual outflow ever recorded. They were net buyers in only four months (March‑June).
Why Foreign Investors Are Leaving
- Weak rupee: The Indian rupee has fallen more than 5% this year, making Indian assets cheaper in dollar terms but also raising risk concerns.
- Trade‑deal uncertainty: Ongoing talks with the United States have not produced a final agreement, adding to investor caution.
- High valuations: Many Indian stocks appear expensive compared with peers in other Asian markets.
- AI lag: India’s exposure to the fast‑growing artificial‑intelligence sector is still modest, making it less attractive to tech‑focused funds.
- Better alternatives: Other Asian markets are offering more appealing price‑earnings ratios, pulling money away from India.
Domestic Institutions Fill the Gap
Indian mutual funds and other domestic institutional investors (DIIs) have stepped up. In December alone they bought about ₹64,056 crore of shares, taking total 2025 inflows to a record ₹7.72 lakh crore.
Early‑year buying was especially aggressive: ₹86,591 crore in January, ₹64,853 crore in February, followed by strong purchases of ₹67,642 crore in May and ₹72,673 crore in June, driven largely by large block deals.
Impact on the Market
Despite the foreign sell‑off, the Nifty 50 index is up about 10% so far in 2025, keeping the market on track for a ten‑year streak of gains. The steady flow of domestic money has softened the blow from FPI outflows and helped maintain overall market confidence.
Bottom Line
Foreign investors are pulling out record amounts of money due to a weak rupee, trade‑deal delays, and valuation concerns. However, robust buying by Indian institutions is keeping the market buoyant. As always, consider your own goals and risk tolerance before making any investment decisions.