New Delhi: Foreign Portfolio Investors (FPIs) have started 2025 on a cautious note in Indian equities, with a net selling of Rs 4,285 crore in just the first three trading sessions of the year, according to data from the National Securities Depository Limited (NSDL). The data further revealed that the highest selling in the equity segment occurred on the very first day of 2025, with a significant net outflow of Rs 5,351 crore. This marked the biggest single-day sell-off by foreign investors in the equity markets this year.
However, the data for the last month, December, highlighted that net investment by FPIs in Indian equities stood positive, with a net investment of Rs 15,446 crore. The year 2024 marked a positive ending, but the net buying value in Indian equities by FPIs drastically reduced, declining to Rs 427 crore.
The country experienced a drastic drop in Foreign Portfolio Investment (FPI) inflows in 2024, with net investments falling by 99 per cent compared to the previous year. One of the primary reasons for this decline was the dominance of the US economy in the global markets.
The strong performance of the US economy, coupled with resilient stock markets and prolonged higher interest rates, directed substantial investment toward US bonds, money markets, and equities. This shift occurred at the expense of emerging markets like India. Additionally, Indian markets lost some appeal due to higher valuations, an elevated market cap-to-GDP ratio, slowing GDP growth, weaker industrial output, and reduced corporate earnings growth.
The early sell-off reflects FPIs’ cautious stance as they reassess market conditions amid global economic uncertainties and domestic factors, signaling a potentially volatile start to the year for Indian equity markets. The sharp decline in FPI inflows underscores the need for India to address both global and domestic challenges to sustain foreign investment and bolster economic growth in the coming years.