India’s equity markets witnessed another wave of foreign fund outflows as Foreign Portfolio Investors (FPIs) pulled out a hefty ₹12,257 crore (~USD 1.4 billion) in just the first week of September 2025. The sell-off comes against the backdrop of a strong US dollar, renewed tariff concerns, and persistent geopolitical tensions weighing on global investor sentiment.
According to depository data, FPIs have been cautious throughout the year, frequently shifting capital from emerging markets like India to safer assets. With this latest withdrawal, the cumulative outflow from FPIs in 2025 now stands at ₹1.43 lakh crore, highlighting the growing pressure on domestic equities.
Why FPIs Are Selling
Analysts point to three primary factors behind the exodus of Foreign Portfolio Investors:
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Strengthening US Dollar – A rising dollar often prompts investors to repatriate funds, reducing exposure in emerging markets.
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Tariff Concerns in the US – Ongoing policy moves around trade and tariffs have fueled uncertainty in global supply chains.
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Geopolitical Risks – Conflicts in key global regions and strained international relations have made investors more risk-averse.
Impact on Indian Markets
Despite the heavy withdrawals, Indian markets have shown resilience, supported by strong domestic institutional investors (DIIs) and retail participation. Experts believe that while short-term volatility may persist, India’s long-term growth story remains intact.
Outlook Ahead
Market strategists caution that unless global risks subside, FPIs may continue to trim positions in Indian equities. However, sectors tied to domestic consumption and infrastructure are likely to remain attractive for long-term investors.
Risk Disclaimer
This article is for informational purposes only and should not be considered investment advice. Market investments are subject to risks, and readers are encouraged to consult a financial advisor before making decisions.
