FPIs withdraw $2.5B from Indian stocks so far this month
The latest outflows follow a net withdrawal of Rs 1.66 lakh crore ($18.9 billion) in 2025, driven by volatile currency movements, global trade tensions, concerns over potential US tariffs, and stretched equity valuations.
Sustained foreign selling has also contributed to the rupee’s nearly 5 per cent depreciation against the dollar during 2025.
Data from NSDL shows FPIs pulled out Rs 22,530 crore from Indian equities between January 1 and January 16.
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Market experts attributed the continued withdrawal to a combination of global 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,” said Sachin Jasuja, Head of Equities and Founding Partner at Centricity WealthTech.
Echoing similar views, Himanshu Srivastava, Principal-Manager Research at Morningstar Investment Research India, said elevated US bond yields and dollar strength have made US assets relatively more attractive.
He added that geopolitical and trade-related uncertainties continue to weigh on emerging market risk appetite.
According to V K Vijayakumar, Chief Investment Strategist at Geojit Investments, lingering uncertainty over the US-India trade agreement has also dampened investor sentiment.
On the domestic front, relatively rich valuations in certain market segments, along with mixed cues from the ongoing earnings season, have led to profit-taking and portfolio rebalancing by foreign investors.
The persistent depreciation of the rupee, down nearly 5% in 2025 and weakening further to around 90.44 per dollar recently, has eroded dollar returns despite stable index levels, adding further pressure on FPI flows.
Vijayakumar said the selling trend could continue until clear positive triggers emerge for a sustained market rally. He added that the AI-led trade that dominated markets in 2025 has carried into early 2026, though a reversal in this trend could occur later in the year.
It’s not just foreign portfolio investors exiting the markets. Active client bases across India’s brokerage industry shrank sharply in 2025, with the top 10 players collectively recording a double-digit decline in activity.
NSE data shows that the 10 largest stock brokerages, which together account for nearly 80% of the market, had 3.57 crore active users in December 2025, down 10.3% from 3.98 crore in January.
Across the broader industry, active users fell 10.7% over the year, sliding from 5.02 crore in January 2025 to 4.48 crore by December. This marked a clear reversal from 2024, when active accounts surged 31.15%, rising from 3.82 crore in January to about 5.01 crore a year later.
The data points to a cooling in retail participation after a period of exuberance, weighing even on the industry’s largest players.
(With inputs from PTI)
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