Foreign investors withdrew ₹11,820 crore ($1.3 billion) from Indian equities in the first week of December, primarily due to the rupee’s sharp depreciation. This significant outflow follows a net withdrawal of ₹3,765 crore in November, adding further pressure to the markets.
These recent withdrawals come on the heels of a brief pause in October, when foreign portfolio investors (FPIs) injected ₹14,610 crore into the market, breaking a three-month streak of substantial withdrawals: ₹23,885 crore in September, ₹34,990 crore in August, and ₹17,700 crore in July. According to data from the National Securities Depository Limited (NSDL), FPIs’ total outflows for 2025 now stand at ₹1.55 lakh crore ($17.7 billion).
Analysts attribute the renewed selling to concerns surrounding the currency. The rupee has depreciated nearly 5 percent this year, leading FPIs to withdraw during such periods, noted VK Vijayakumar, Chief Investment Strategist at Geojit Investments. Additionally, year-end portfolio repositioning by global investors—a typical trend before the holiday season—has intensified selling, according to Vaqarjaved Khan, Senior Fundamental Analyst at Angel One. Khan also highlighted that delays in finalizing the India-US trade deal have further dampened global investor sentiment.
Despite the foreign investor exodus, the impact on the markets has been mitigated by strong domestic participation. Domestic Institutional Investors (DIIs) purchased equities worth ₹19,783 crore during the same period, effectively offsetting the foreign selloff, Vijayakumar explained. DII confidence is bolstered by robust GDP numbers and expectations of improved corporate earnings in the near future.
Sentiment received an additional boost following the Reserve Bank of India’s (RBI) 25-basis-point rate cut on December 5, which prompted FPI flows to turn positive for the day at ₹642 crore. This turnaround is notable, considering that FPIs had sold nearly ₹13,000 crore by December 4.
“The RBI not only reduced rates but also raised its FY26 growth forecast to 7.3 percent while cutting the Consumer Price Index (CPI) forecast to 2 percent. A strong growth environment is favorable for Indian equities,” Khan stated.
Looking ahead, global liquidity may receive another boost. The CME Fed Watch Tool indicates that the Federal Open Market Committee (FOMC) is expected to cut rates by 25 basis points next week, a move that typically supports risk assets worldwide. India could stand to benefit significantly, although the lack of a finalized India-US trade deal remains a potential risk.
In the debt market, FPIs invested ₹250 crore under the general limit while withdrawing ₹69 crore through the voluntary retention route during the same period.
