Foreign portfolio investors (FPIs) have continued their selling streak in the Indian stock market in December, remaining net sellers on all trading days so far and pulling out over ₹17,800 crore worth of equities through the exchanges.
According to NSDL data, FPIs sold ₹17,821 crore of Indian stocks in the first nine trading sessions of December, more than four times the ₹3,765 crore sold in the entire month of November.
FPIs had turned net buyers in October, pouring in ₹14,610 crore; however, the selling resumed in November, albeit at the lowest levels in 2025 so far.
Nevertheless, December saw a sharp acceleration in selling as market sentiment weakened, following a sustained crash in the Indian rupee, which lost over 6% of its value this year.
A weak rupee directly reduces the dollar value of FPI investments and raises perceived risks, prompting foreign investors to withdraw capital in search of safer and more stable returns.
The decline in the rupee has made it the worst-performing currency in Asia, compounded by steep US tariffs of up to 50% on Indian goods, which have hurt exports to its largest trading partner.
Earlier in the year, India was among the first major markets to rebound after US President Donald Trump announced global tariffs in April, attracting investors who saw the country as a safe haven amid trade tensions. However, both countries did not finalize a trade deal despite multiple rounds of negotiations.
Despite elevated valuations in global AI and chip stocks and expectations of US Federal Reserve rate cuts, FPI sentiment towards India, the third-largest economy in Asia, remains subdued.
Analysts attribute this to weak earnings growth, noting that the trend is likely to reverse only once corporate earnings gain momentum and a favourable India-US trade deal is reached.
FPIs pull over ₹1.6 lakh crore in 2025 so far
According to NSDL data, FPIs have withdrawn a net ₹1.61 lakh crore from Indian equities so far in 2025, putting the year on track for the largest-ever foreign selling of Indian stocks. Out of the last 11 months, FPIs were net buyers in only three: April, May, and October.
Despite these strong outflows, robust support from domestic investors has helped limit the damage, even enabling frontline indices to hit fresh peaks last month after nearly a year.
DIIs, largely comprising mutual funds, have bought equities worth ₹36,101 crore, taking their total inflow for 2025 to a record ₹7.44 lakh crore.
Earnings growth key to market direction, FII selling likely to decline, says analyst
VK Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said that it would be difficult for the FIIs to sell continuously and maintain a high short position in the market, particularly in the context of healthy SIP inflows and an economy showing strong growth prospects.
He emphasizes that factors such as rupee depreciation, sustained FII selling, delays in the finalization of the US-India trade deal, and the ongoing AI trade are all temporary drags on the markets.
He notes that sustained selling in India, despite bright growth and earnings prospects, is not a sustainable policy.
“The most important factor that will dictate the direction of the market is earnings growth, which looks promising for FY27. Sustained selling in India when the prospects for growth and earnings are strong is not a sustainable policy. Therefore, going forward, FII selling is likely to decline,” he added.
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