Foreign portfolio traders (FPIs) pulled out Rs 11,820 crore from Indian fairness markets within the first week of December. |
Mumbai: Foreign portfolio traders (FPIs) pulled out Rs 11,820 crore from Indian fairness markets within the first week of December. The essential motive behind this promoting was the sharp fall within the Indian rupee, which has weakened by almost 5 p.c this yr. A weak rupee reduces overseas traders’ returns, forcing many to chop their publicity to Indian shares.
Outflows Add to a Tough 2025 So Far
The promoting development has been sturdy for many of 2025. After a small pause in October, when FPIs invested Rs 14,610 crore, the promoting resumed. Earlier months noticed heavy withdrawals of Rs 23,885 crore in September, Rs 34,990 crore in August and Rs 17,700 crore in July. With the most recent outflow, the whole FPI promoting in equities for 2025 has now touched Rs 1.55 lakh crore.
Why Foreign Investors Are Selling
Experts say the important thing set off is foreign money danger. When the rupee falls, overseas traders are likely to promote as a result of their greenback returns shrink. Another motive is year-end portfolio reshuffling, as world traders alter their investments earlier than the vacation season. Delays within the India-US commerce deal have additionally made world traders extra cautious.
Domestic Investors Step In to Support Markets
Even with heavy FPI promoting, Indian markets haven’t fallen sharply. This is as a result of Domestic Institutional Investors (DIIs) purchased shares value Rs 19,783 crore throughout the identical interval, totally offsetting overseas promoting. Domestic traders have remained assured as a consequence of sturdy GDP development and expectations of higher company earnings within the coming quarters.
RBI and Global Cues Offer Some Relief
Market sentiment improved after the RBI reduce rates of interest by 25 foundation factors on December 5. On that day, FPI flows turned constructive with internet shopping for of Rs 642 crore, after days of steady promoting. The RBI additionally raised its FY26 GDP development forecast to 7.3 p.c and lowered its inflation outlook to 2 p.c, which boosted market confidence.
Global liquidity might enhance additional, because the US Federal Reserve is anticipated to announce a 25 bps fee reduce subsequent week. This might help danger property, together with Indian equities, though the pending India-US commerce deal stays a key danger.
Activity within the Debt Market
In the bond market, FPIs invested Rs 250 crore underneath the final restrict however withdrew Rs 69 crore via the voluntary retention route throughout the identical interval.
