Foreign portfolio investors (FPIs) continued their net selling streak in Indian equities for the third consecutive month, withdrawing ₹23,885 crore (approximately $2.7 billion) in September 2025, according to data from the National Securities Depository Ltd (NSDL) and Central Depository Services Ltd (CDSL). This brings the year-to-date (YTD) equity outflow to a staggering ₹1.58 lakh crore ($17.6 billion), the highest in recent years, driven by global uncertainties like US tariff hikes, a weakening rupee, and geopolitical tensions. For market analysts, investors, and economists searching FPIs withdraw ₹23,885 crore September 2025, FPI equity outflow India YTD, or US tariffs impact Indian markets, this sustained sell-off—following ₹34,990 crore in August and ₹17,700 crore in July—signals caution among foreign funds, with the Nifty 50 down 1.5% YTD despite strong domestic fundamentals. However, debt markets bucked the trend with net inflows of ₹1,085 crore under the general limit and ₹1,213 crore via the voluntary retention route, highlighting a flight to safety.
The outflows, concentrated in large-caps like IT and banking, have pressured valuations, but experts see selective recovery if US policy eases.
September Outflow Breakdown: Third Month of Net Selling
FPIs offloaded ₹23,885 crore from equities in September, extending the YTD tally to ₹1.58 lakh crore—the highest since 2020’s ₹1.32 lakh crore during the COVID crash. This marks the third straight month of withdrawals, with August’s ₹34,990 crore (post-tariff fears) and July’s ₹17,700 crore (geopolitical jitters) setting the tone.
- Equity Focus: Large-caps bore the brunt, with IT down 5% and banking 3% amid H-1B visa fee hikes.
- Debt Inflows: ₹2,298 crore total, signaling preference for fixed income.
- Rupee Impact: Currency depreciation to ₹84.50/USD amplified outflows in dollar terms.
NSDL data shows FPIs as net sellers in 8 of 9 months this year, with only June’s ₹2,300 crore inflow providing brief relief.
| Month | Equity Outflow (₹ Cr) | Debt Inflow (₹ Cr) | YTD Net Equity Outflow (₹ Cr) |
|---|---|---|---|
| July | -17,700 | +1,500 | -1,20,000 |
| August | -34,990 | +2,000 | -1,55,000 |
| September | -23,885 | +2,298 | -1,58,000 |
Key Drivers: US Tariffs, Rupee Weakness, and Global Tensions
The September pullout reflects macroeconomic headwinds:
- US Tariffs: Trump’s 50% import duties on labor-intensive goods like textiles and pharma—key Indian exports—triggered a risk-off sentiment, with FPIs reallocating to China.
- Rupee Slide: Currency fell 2.5% to ₹84.50/USD, eroding returns for dollar-based investors.
- Geopolitical Jitters: Middle East conflicts and US election uncertainty amplified safe-haven flows to US Treasuries.
- Valuation Premium: India’s PE ratio at 23x vs. US 20x prompted profit-taking.
VK Vijayakumar of Geojit Investments noted: “FPIs are shifting to better returns abroad; revival awaits earnings recovery in 2-3 months.”
Market Impacts: Pressure on Equities, Debt Resilience
The outflows have weighed on benchmarks:
- Nifty 50: Down 1.5% YTD, with mid/small-caps hit harder (down 5-7%).
- Sector Effects: IT (-8%), banking (-3%), metals (-10%) led losses; FMCG (+2%) held firm.
- Debt Strength: Inflows reflect safety, with G-Secs yields easing to 6.8%.
Domestic mutual funds absorbed ₹15,000 crore in September, cushioning the blow.
Outlook: Recovery Hinges on Policy Easing
Experts forecast inflows resuming if US tariffs moderate and earnings beat estimates. Geojit’s Vijayakumar sees “selective interest” in 2-3 months, with debt inflows sustaining at ₹1,000-1,500 crore monthly. Business standard
