What Caused FPIs to Withdraw Rs 64,000 Crore in January?

In January 2025, Foreign Portfolio Investors (FPIs) pulled out Rs 64,000 crore from Indian equities. This large outflow contrasts with the Rs 15,446 crore investment made in December 2024. Factors driving this include the rupee’s depreciation, rising US bond yields, and weak earnings expectations. The financial sector suffered the most, while the IT sector saw some buying. FPIs also withdrew Rs 4,399 crore from the debt market, reflecting broader risk aversion. This trend has raised concerns about market stability. Market experts worry that continued FPI outflows could exert downward pressure on stock prices and negatively affect market sentiment. However, they remain cautiously optimistic about India’s long-term prospects. They believe that structural reforms and strong domestic consumption will eventually attract FPIs back to the Indian markets. Despite the challenges, experts emphasize the resilience of the Indian economy and the potential for recovery in the coming months.