FPI Exodus: ₹74,000 crore withdrawn from Indian equities in January 2025

Foreign Portfolio Investors (FPIs) have continued their withdrawal from Indian equities, pulling out ₹5,015 crore on January 27, marking the 17th consecutive session of outflows. This brings the total withdrawal for January to a staggering ₹74,095 crore, the largest monthly sell-off since October 2024, when FPIs had exited ₹1.14 lakh crore.

The ongoing outflows are driven by several factors, including concerns about the impact of U.S. President Donald Trump’s trade policies on global markets, uncertainty surrounding potential U.S. Federal Reserve rate cuts in 2025, weak earnings reported by Indian companies for Q3, and rising U.S. bond yields.

Despite these challenges, domestic institutions have stepped in, investing ₹73,586 crore to absorb the selling pressure. However, their efforts have not been enough to prevent market declines. The Nifty 50 and Sensex have both corrected by up to 12% from their September peaks.

The small-cap sector is facing the brunt of this selling pressure. The Nifty Smallcap 100 index has corrected by 20% from its recent high, while the Nifty Midcap 100 index has dropped by 15.31%. As earnings growth slows in Q3, brokerages have adjusted their Nifty 50 target levels. InCred Equities, for example, lowered its target for Nifty 50 to 23,260 from 25,120, citing weaker economic data and earnings cuts. In a worst-case scenario, the brokerage predicts Nifty could fall to 21,016.