New Delhi: In February, foreign investors withdrew Rs 34,574 crore from Indian stock markets. This brings the total outflow to Rs 1.12 lakh crore in just the first two months of 2025. Rising global trade tensions and worries about corporate earnings are key factors in this trend.
Vipul Bhowar, a Senior Director at Waterfield Advisors, noted that high valuations in Indian equities and concerns about earnings growth are causing these consistent outflows. Data shows that Foreign Portfolio Investors (FPIs) sold a significant amount of shares, following a net outflow of Rs 78,027 crore in January alone.
This substantial selling has pushed the BSE’s benchmark Sensex down more than 6% so far this year. Increased US bond yields, a stronger US dollar, and uncertainties in the global economy have changed investors’ focus towards US assets, according to Bhowar.
Additionally, the earnings reports for the third quarter of the fiscal year 2025 have been underwhelming, creating a sense of caution among investors. Falling commodity prices and reduced consumer spending are hurting corporate profits, which, in turn, make Indian stocks less attractive to foreign investors.
V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, pointed out an interesting trend: FPIs are selling off shares in the financial services sector, which is performing well and has appealing valuations. They are reallocating their investments towards Chinese stocks, where valuations are lower.
Furthermore, FPIs also withdrew funds from the debt market, pulling out Rs 8,932 crore from general debt limits and Rs 2,666 crore from the voluntary retention route.
The trend highlights a cautious stance among foreign investors, who significantly reduced their investments in Indian equities throughout 2024, recording only Rs 427 crore in net inflows. This is a stark contrast to 2023, when net inflows reached a remarkable Rs 1.71 lakh crore, fueled by optimism about India’s economic strength. In comparison, 2022 saw a net outflow of Rs 1.21 lakh crore due to aggressive rate hikes by global central banks.
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Source linkSHARE MARKET, FPI OFFLOADED SHARES, INDIAN EQUITY MARKETS IN FEBRUARY, STOCK MARKET CRASH REASON, FOREIGN PORTFOLIO INVESTORS, FPIS WITHDRAW RS 34,574 CR FROM EQUITIES IN FEB; TOTAL OUTFLOW HITS RS 1.12 LAKH CR IN 2025
