Foreign portfolio investors (FPIs) have initiated the new calendar year with a significant sell-off in the Indian equity markets. Data reveals that in just the first week of January, overseas investors pulled out a substantial Rs 11,820 crore (approximately $1.3 billion) from Indian stocks.
Rupee Depreciation Triggers Major Sell-Off
The primary catalyst behind this sharp withdrawal is identified as the pronounced depreciation of the Indian rupee against the US dollar. A weakening domestic currency erodes the value of foreign investors' returns when converted back to their home currency, prompting a risk-off approach. This trend marks a continuation of the cautious stance observed in the previous month.
Sustained Outflow Pressures Markets
This hefty withdrawal in early January follows a net outflow of Rs 3,765 crore recorded in November 2024. The consecutive months of selling have added sustained pressure on the domestic equity markets, contributing to volatility and influencing broader market sentiment. The cumulative effect of these movements is significant for the annual figures.
When the latest numbers are accounted for, the total foreign institutional investor (FII) outflow for the current calendar year 2025 has reached Rs 1.55 lakh crore. This substantial figure underscores the persistent selling pressure from foreign funds over the recent period, shaping the investment landscape for the year ahead.
