FPI Activity Turns Cautious: Net Outflow of ₹4,067 Cr on Monday, Followed by Mild Rebound on Tuesday

Mumbai, Jul 16: Foreign Portfolio Investors (FPIs) displayed cautious sentiment in Indian markets at the start of the week, recording a significant net outflow of ₹4,066.92 crore on Monday, 15 July 2025. However, there was a modest reversal on Tuesday, 16 July 2025, with a net inflow of ₹683.12 crore, as per depository data compiled by NSDL.

Monday: Hefty Selloff in Equities Weighs on Sentiment

On 15 July, FPIs were net sellers in Indian equities, offloading ₹789.32 crore through both stock exchange and primary market routes. The broader outflow was further exacerbated by notable selling in the debt general and Voluntary Retention Route (VRR) categories, which saw withdrawals of ₹264.14 crore and ₹51.57 crore, respectively. Conversely, the Fully Accessible Route (FAR) for debt recorded a robust inflow of ₹1,802.01 crore, which partially mitigated the overall withdrawals.

The NSDL (National Securities Depository Limited) compiles and releases data on FPI investments in India, providing a comprehensive overview of foreign investor activity across various asset classes, including equity, debt (general, VRR, and FAR), and hybrid instruments. This data is crucial for understanding foreign capital flows into the Indian market.

Key Investment Flow: July 15

Despite the strong inflows via the FAR route, the prevailing sentiment in the equity market remained risk-off. The currency exchange rate used for reporting was ₹85.9910 per USD.

What is Debt-FAR?

The Debt-FAR (Fully Accessible Route) allows FPIs to invest in specified government securities without any quantitative limits. This route was introduced by the Reserve Bank of India to facilitate easier access for foreign investors to the Indian government bond market. The Debt-VRR (Voluntary Retention Route) is another channel that allows FPIs to invest in Indian debt markets free of certain macro-prudential and other regulatory norms, provided they commit to retain a minimum percentage of their investments in India for a specified period, typically three years.

Tuesday: Signs of Stabilisation with Narrow Net Buying

On 16 July, the market tone shifted to a mildly positive stance, with total net inflows across all segments amounting to ₹683.12 crore. While equities again recorded net selling of ₹789.32 crore, FPIs continued to be net buyers in the debt-FAR segment for the second consecutive day, contributing a substantial ₹1,802.01 crore.

Conversely, the debt-VRR and hybrid segments also registered mild outflows of ₹51.57 crore and ₹14.46 crore, respectively.

Tuesday Summary: Investment Flows

The persistent positive bias in the debt-FAR segment suggests stable demand for India’s government securities, even amidst volatility in the equity market. This route is typically favoured by long-term, sovereign, and central bank-linked investments.

FPI Derivatives Snapshot (July 15)

• Index Futures: Net sell of ₹3,274.55 crore
• Index Options: Net sell of ₹11,403.80 crore
• Stock Futures: Net sell of ₹2,262.37 crore
• Stock Options: Net sell of ₹267.78 crore

FPI derivatives involve foreign investors trading financial instruments whose value is derived from underlying assets like stocks, indices, commodities, or currencies. This includes futures, options, and swaps, often used for hedging existing positions or speculating on future price movements. The elevated open interest across index and stock futures signals continued hedging activity, likely in anticipation of the ongoing corporate earnings season.

Outlook

While Monday’s session marked one of the steepest net outflows observed in July so far, Tuesday’s modest recovery suggests that selective interest from foreign investors persists, particularly in the sovereign debt space. However, the consistent net selling in equities over the past two sessions could indicate growing caution among foreign investors, influenced by global macroeconomic uncertainties and strategic positioning ahead of the Union Budget.

About the Data: The above figures are compiled by NSDL based on custodial submissions and represent trades executed up to July 15 and reported on July 16, 2025. Figures include stock exchange transactions, primary market allocations, and other reported trades.

REF: https://www.fpi.nsdl.co.in/web/Reports/Latest.aspx

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