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FPIs pull out Rs 77,901 cr of equities in first half of 2025

Despite being net sellers, foreign investors’ shareholding in the domestic market remained at 16.09 per cent as of June 30, 2025, marginally lower than 16.11 per cent as of December 2024.

During the January-June period, the information technology (IT) sector saw the highest amount of outflows at Rs 30,600 crore from FPIs.

During the first half of 2025, foreign portfolio investors (FPIs) pulled out a net of Rs 77,901 crore of shares from Indian markets, with the highest outflows seen in the IT sector, followed by fast moving consumer goods (FMCG) and power sectors.

Despite being net sellers, foreign investors’ shareholding in the domestic market remained at 16.09 per cent as of June 30, 2025, marginally lower than 16.11 per cent as of December 2024.

Foreign portfolio investors went on a selling spree in the first three months of 2025, offloading Rs 1.17 lakh crore worth of equities. They sold Rs 78,027 crore in January, Rs 34,574 crore in February, and Rs 3,973 crore in March, according to the National Securities Depository Ltd (NSDL) data.

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In the April to June period, FPIs turned net purchasers of domestic shares, buying Rs 4,223 crore in April, Rs 19860 crore in May, and Rs 14,590 crore in June, the data showed. FPIs buying the April-June period were lower compared to the amount of equities sold during the January-March 2025, making them net sellers in the first half of 2025.

“A pattern that can be discerned from this is that whenever valuations go beyond a particular level, FPIs turn sellers, and they sell aggressively. In March and April, the markets declined and valuations became reasonably attractive, therefore, they (FPIs) started buying in April, May and June,” said VK Vijayakumar, Chief Investment Strategist, Geojit Investments Ltd.

He said that valuations in domestic markets continue to remain high due to sustained inflows from retail investors and domestic institutional investors (DIIs).

During the January-June period, the information technology (IT) sector saw the highest amount of outflows at Rs 30,600 crore from FPIs. This was mainly on account of tepid growth in earnings and revenue of the IT sector during the period.

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“If the revenue and earnings growth are in single digits, it is difficult to justify higher valuations in the IT sector. This is the reason for higher outflows by FPIs from the sector,” said an IT sector analyst.

The other sectors from where FPIs pulled out money in the first half of 2025 included FMCG (Rs 18,178 crore), power (Rs 15,422 crore), automobile and auto components (Rs 11,308 crore), consumer durables (Rs 11,896 crore) and consumer services (Rs 11,608 crore).

“The FMCG sector has traditionally been a sort of a defensive segment, and therefore, it had high valuations. But now segments with high valuations are witnessing sectoral churn. We are seeing money being moved away from FMCG,” Vijayakumar said.

During the first half of 2025, the sectors that saw largest inflows from foreign investors were telecommunications (Rs 26,685 crore), financial services (Rs 13,717 crore), and services (Rs 7,294 crore).

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FPIs inflows weaken in July

After three months of positive inflows, FPIs have again turned sellers in July, offloading Rs 2,660 crore worth of domestic shares up to July 17, NSDL data showed.

“FPI selling in July can be attributed to the recovery in the market from the March lows and the consequent elevated valuations. Since other markets are cheaper relative to India, FPIs may again sell and move money to cheaper markets as a short-term strategy,” Vijayakumar said.