Foreign Portfolio Investors (FPIs) withdrew a staggering ₹34,993 crore (approximately USD 4 billion) from Indian equity markets in August 2025, marking the largest sell-off in six months. This massive outflow, nearly double the ₹17,741 crore pulled out in July, has pushed the total FPI equity withdrawals for 2025 to a whopping ₹1.3 lakh crore, according to depository data.
The exodus was driven by a mix of global and domestic pressures. A key trigger was the US imposing steep tariffs of up to 50% on Indian exports, which rattled investor confidence and raised concerns about India's trade competitiveness and economic growth. "The tariffs sent shockwaves through the market, significantly denting sentiment," said Himanshu Srivastava, Associate Director - Manager Research at Morningstar Investment. He also pointed to disappointing corporate earnings in key sectors for the June quarter, which further eroded investor appetite.
Adding to the turmoil, high valuations in the Indian market compared to other global markets have prompted FPIs to redirect funds to cheaper alternatives. V K Vijayakumar, Chief Investment Strategist at Geojit Investments, explained, "India's relatively expensive valuations are pushing FPIs to seek better opportunities elsewhere."
Despite the heavy selling in the secondary market, FPIs have remained active in the primary market, investing ₹40,305 crore in initial public offerings (IPOs) this year, where valuations are perceived as more reasonable.
Also Read: FPIs Pull ₹21,000 Crore from Indian Equities Amid Global Uncertainties
In the debt market, FPIs showed mixed behavior, injecting ₹6,766 crore into the debt general limit while withdrawing ₹872 crore from the debt voluntary retention route during the same period.
Market analysts warn that continued FPI outflows could pressure Indian equities further, potentially impacting market stability and investor confidence in the near term. As global and domestic challenges persist, all eyes are on how India’s markets will navigate this turbulent phase.