Foreign investors offload ₹4,285 crore from Indian equities in just three days

In a challenging start to 2025, Foreign Portfolio Investors (FPIs) have pulled ₹4,285 crore from Indian equities within the first three trading days of January, reflecting ongoing global and domestic concerns.

Highlights:

FPIs withdrew ₹4,285 crore in just three days (Jan 1-3, 2025).

Selling driven by high valuations and global economic uncertainties.

Weakening rupee and US Federal Reserve's cautious stance added to negative sentiment.

What’s Driving the Sell-Off?

Despite investing ₹15,446 crore in December 2024, FPIs have now taken a more cautious stance. Analysts attribute this shift to several factors:

High Valuations: Elevated stock valuations in Indian markets are making them less attractive to global investors.

Global Headwinds: Rising US bond yields and fewer-than-expected rate cuts from the US Federal Reserve have curbed investor confidence.

Depreciating Rupee: A weakening Indian rupee against the US dollar adds currency risk, further deterring foreign investors.

Historical Perspective

FPI activity has been volatile over recent years. While 2023 saw robust net inflows of ₹1.71 lakh crore amid optimism about India's economic prospects, 2024 was marked by net inflows of just ₹427 crore, reflecting a more cautious outlook. Notably, 2024 witnessed the second-highest level of FPI selling in a decade, driven by global tightening measures, high valuations, and tepid corporate earnings.

Outlook for 2025

Experts suggest that FPI inflows may regain momentum later in 2025, once policy clarity in the US emerges and corporate earnings show recovery. However, in the near term, investors are likely to remain wary of India’s equity markets.

Disclaimer: This article is for informational purposes only and should not be considered investment advice. Always consult a financial advisor before making investment decisions.