Domestic institutional investors, on the other hand, have bought a record ₹7,20,651 crore in 2025 so far | Photo Credit: ismagilov
Until December 12, net outflows had swollen to ₹1,52,273 crore. Spread across about 234 trading days of six hours each, this translates to about ₹110 crore exiting the market every trading hour. By any measure, 2025 ranks among the toughest years for Indian equities in nearly two decades in terms of foreign participation. Yet, the market impact has been far milder than in past episodes of sustained FPI exodus.
Domestic institutional investors (DIIs) more than offset the pressure buying a record ₹7,20,651 crore in 2025 so far. They were net sellers on just 24 days and did not record a single net-sell month. On an hourly basis, this amounts to nearly ₹510 crore of buying every trading hour. This unprecedented surge in domestic flows — driven by mutual fund SIPs, insurance inflows and pension allocations — significantly reduced India’s dependence on foreign capital during the year.
Market performance reflected this divergence. Large-caps held up relatively well, with the Nifty 100 Total Return Index delivering close to 10 per cent year-to-date. Mid-caps gained about 5 per cent, while the Nifty Smallcap 250 slipped 7 per cent.
Why FPIs sold
A confluence of global and local factors weighed on. To begin with, high valuations in Indian markets relative to global peers have weighed for over a year now. Uncertainty about US bond yields and the future policy path kept global risk appetite uneven, while intermittent rupee weakness added to FPI caution. At the same time, tariff-related uncertainty and shifting global trade narratives raised the bar for emerging market allocations.
This also reflected a broader global rotation. A defining theme of 2025 was the reallocation of capital toward markets offering clearer earnings visibility and more attractive relative valuations. Select stocks in Korea and Taiwan, particularly those linked to AI and semiconductors, along with a revival in China, drew incremental flows.
Bloomberg data underline this shift. India emerged as the second-most sold equity market globally in 2025 so far, with net foreign outflows of $17.76 billion. Canada topped the list withe $24.9 billion outflows. On the other side of the ledger, the US was the biggest beneficiary, attracting $477.2 billion of net inflows, ahead of China ($96.2 billion) and the Netherlands ($65.5 billion).
Sectorally, FPI investment values rose 79 per cent in Telecom, 46 per cent in Services, and 28 per cent in Oil, Gas & Consumable Fuels. In contrast, holdings in IT, Realty, and Consumer Durables declined by 29 per cent, 23 per cent, and 21 per cent, respectively.
Looking ahead to 2026, the rise of DIIs as structurally dominant market players suggests that domestic flows can increasingly cushion foreign exits, enhancing market resilience. For FPIs, however, re-engagement will depend on consistent earnings delivery, currency stability and whether the current shift in emerging market leadership proves durable.
Published on December 13, 2025
