Foreign Portfolio Investors Withdraw ₹4,784 Crore from Indian Equities Amid Market Volatility

This week, Foreign Portfolio Investors (FPIs) have sold ₹4,784 crore worth of shares in the Indian equity markets, significantly impacting net inflows for May. The total investment for the month now stands at ₹13,835 crore, down from ₹18,620 crore. The sharpest selling occurred on May 21, with over ₹10,000 crore sold in one day. Experts suggest that these outflows are influenced by external factors, particularly the instability in global bond markets, rather than any fundamental issues within the Indian economy. This trend highlights the cautious approach of foreign investors amid ongoing global uncertainties.

By Narendra Chaudhary May 24, 2025, 14:10 IST

FPI Selling Trends in Indian Markets

In a notable shift, Foreign Portfolio Investors (FPIs) have emerged as net sellers in the Indian stock market this week, divesting shares worth ₹4,784.32 crore from May 19 to May 23, as per the latest data from the National Securities Depository Ltd (NSDL).

This wave of selling has considerably impacted the net inflows for May, which now total ₹13,835 crore, a decline from ₹18,620 crore reported the previous week. This suggests that foreign investors withdrew nearly ₹4,800 crore in just five trading days.

The most significant selling occurred on Wednesday, May 21, when FPIs offloaded shares exceeding ₹10,000 crore in a single day. However, the week began positively, with substantial inflows noted on Monday and Tuesday.

As a result of this week's outflows, the total net investment by foreign investors in Indian equities for the year 2025 has reached a net outflow of ₹98,516 crore, indicating a cautious stance from foreign funds amid global uncertainties.

Market Analysis and Expert Insights

Market analysts believe that the current selling trend is not necessarily indicative of fundamental weaknesses within the Indian markets but is likely influenced by external factors. One significant factor could be the ongoing instability in global bond markets.

Ajay Bagga, a banking and market expert, noted, “This fluctuation points to the turmoil in global bond markets affecting leveraged funds or carry trade funds, prompting them to withdraw profits from Indian markets to address liquidity needs elsewhere.”

He also mentioned, “Another factor could be the manipulation of option pricing by FPIs, who may be adjusting option premiums through buying and selling underlying shares in cash markets. This could explain the selling of index heavyweights on specific days and the sharp market reversals observed.”

Analysts are interpreting these outflows as movements of 'hot money', which refers to quick, speculative investments rather than a reflection of weakening fundamentals in the Indian economy.

Furthermore, NSDL data indicated that net investments by FPIs in Indian equities were ₹4,223 crore in April, suggesting a shift in foreign investment trends. In previous months, FPIs had sold stocks worth ₹3,973 crore in March, and in January and February, they divested equities worth ₹78,027 crore and ₹34,574 crore, respectively.