The Indian stock market opened December on a worrying note as foreign portfolio investors (FPIs) withdrew a large sum from equities. Data show that in the first week of December 2025, FPIs pulled out around ₹11,820 crore from Indian equities. Some reports go further to note that over a slightly longer stretch (first four days of December), FPIs withdrew approximately ₹13,121 crore.
Why the sell-off happened
📉 Rupee depreciation and currency risk
A major reason behind the massive sell-off is a steep fall in the value of the Indian rupee. As the rupee weakens, returns in foreign currency terms shrink — prompting foreign investors to reduce exposure.
🔄 Year-end portfolio rebalancing
The timing also coincides with typical year-end portfolio rebalancing by global investors, who often exit riskier emerging-market equities ahead of the holiday season.
📉 Previous monthly outflows continued
The early December sell-off follows a net outflow in November of ₹3,765 crore.
Although FPIs had briefly turned buyers in October (with infows around ₹14,610 crore), the respite was short-lived.
Impact so far: Markets, rupee & investor sentiment
- The heavy FPI exits have increased pressure on equity markets.
- The rupee has come under strain, worsening currency risk concerns for foreign investors.
- The cumulative FPI outflow for 2025 has now reached around ₹1.55 lakh crore — underlining the sustained capital flight this year.
What to watch: What this trend might signal going ahead
- If the rupee continues to weaken, foreign investors may stay cautious, leading to further outflows.
- Market volatility could increase — especially if global risk factors or macroeconomic shocks compound investor anxiety.
- Domestic institutional investors (DIIs) may play a stabilising role; their participation will be key to offset foreign selling pressure.
Final take
The early-December FPI sell-off — roughly ₹13,000 crore — highlights growing concern among foreign investors over currency volatility, global economic uncertainty, and the usual year-end rebalancing. Unless underlying macroeconomic stability returns, Indian markets may face further pressure.
