The exodus of FPIs from Indian equity markets continued unabated in January 2025, with net outflows touching ₹78,027 crore, according to depositories data. Except for one session, FPIs remained net sellers throughout the month as the Trump trade effect drove capital away from emerging markets.
Despite the sustained selling spree, Indian policymakers remain unperturbed, viewing the trend as a phase of profit-booking rather than a sign of distress. “Indian fundamentals remain strong and most FPIs are exiting only after booking healthy profits,” official sources said.
The strengthening dollar and rising US bond yields, triggered by Donald Trump’s return to the White House, have made US assets more attractive, leading to capital flight from Indian equities. In contrast to January’s heavy selling, FPIs were net buyers of ₹15,448 crore in December 2024 but had offloaded ₹94,017 crore and ₹21,612 crore in October and November respectively.
VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said the primary reason behind this FPI pullout is the strong US economic performance and corporate earnings, which have outpaced India’s recent growth and earnings trajectory. “The Budget has improved sentiment, and with growth and earnings recovery expected, the trend could reverse,” he noted. Domestic challenges too have also contributed to the outflows.
Himanshu Srivastava, Associate Director–Manager Research at Morningstar India, pointed out that continued depreciation of the rupee was pressuring foreign investors to pull out funds.
