FPIs Withdraw ₹7,945 Crore from Indian Equities in September, Selling Eases After Fed Rate Cut

New Delhi, September 22, 2025: Foreign Portfolio Investors (FPIs) have divested ₹7,945 crore from Indian equities in September so far, continuing the trajectory of large outflows. This divestment came on the heels of a net outflow of ₹34,990 crore in August and ₹17,700 crore in July, bringing total net foreign portfolio investor withdrawals from equities in 2025 to ₹1.38 lakh crore. Experts further noted that these uncertain global conditions among foreign investors bring large apprehensions to trade tariffs, currency, and geopolitics.

Fed Rate Cut Provides Short-Term Relief

Even though the selling continued, the outflow rate of funds had lessened following the US Federal Reserve’s recent 25 basis point cut in rates. This dovish stance restored expectations of global liquidity and temporarily encouraged FPIs to re-enter as buyers. In the last week, they added roughly ₹900 crore into Indian equities. Market analysts suggest that two additional cuts are expected this year, so sentiment towards emerging markets like India could also be improved.

Focus on the Debt Market

While the equities faced withdrawals, FPIs took a selective bullish outlook on the Indian debt market, making investments of approximately ₹900 crores under the general limit on the debt issuance. And an additional ₹1,100 crores through the voluntary retention route. The relatively higher yields in Indian bonds, compared to those in developed economies, have produced one of the more attractive options in the debt segment in the current import crisis for investors.

Outlook for Coming Weeks

FPI flows will primarily depend on forthcoming macroeconomic data, tariff negotiations, and further developments in monetary policy. The fresh decline in sales has stimulated some cautious optimism, although there are still elevated risks.

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