December The process of selling by foreign portfolio investors (FPIs) continues. FPIs have withdrawn money from the Indian stock market by selling shares worth Rs 17,955 crore ($2 billion) so far in December. With this selloff, foreign investors have pulled out a total of Rs 1.6 lakh crore ($18.4 billion) from the Indian equity market so far in 2025. These sharp outflows follow a selloff of Rs 3,765 crore in November, which has put pressure on domestic equity markets. Let us tell you that in October, foreign investors had made a net investment of Rs 14,610 crore in the market, due to which the trend of heavy selling of 3 consecutive months was broken.
FPIs had withdrawn Rs 34,990 crore in August
FPIs had withdrawn money by selling equities worth Rs 23,885 crore in September, Rs 34,990 crore in August and Rs 17,700 crore in July. According to National Securities Depository Limited (NSDL) data, FPIs pulled out Rs 17,955 crore from Indian equities between December 1 and 12. Market experts said that this continuous outflow of foreign investors is due to many factors like sharp decline in rupee and high Indian valuations.
Why are foreign investors withdrawing money from Indian market?
Explaining the outflows, Himanshu Srivastava, Principal Manager Research, Morningstar Investment Research India, said that increased interest rates in the US, tight liquidity conditions and preference for safe or high-yielding developed-market assets have affected investor sentiment. Himanshu Srivastava further said that adding to this pressure, India’s relatively high equity valuations have made it less attractive compared to other emerging markets, which currently offer better value.
The impact on the market due to participation of DIIs is quite less.
Waqar Javed Khan, Senior Fundamental Analyst, Angel One, said that weakness in the Indian rupee, global portfolio rebalancing, year-end impact and persistent macroeconomic uncertainty are the main reasons for the withdrawal. Despite this persistent foreign selling, the impact on the markets has been largely mitigated by strong domestic institutional investors (DII) participation. DIIs invested Rs 39,965 crore during the same period, effectively reducing FPI outflows. Looking ahead, some experts believe that selling pressure may ease.
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