FPIs Offload ₹1.6 Lakh Crore in Indian Stocks Since Last Diwali, But Signs of a Turnaround Emerge

In the past year, foreign portfolio investors (FPIs) have played a key role in shaping the direction of the Indian equity market. Data from the National Securities Depository Limited (NSDL) reveals that FPIs have been net sellers of Indian equities in seven of the last 11 months, leading to cumulative outflows of around ₹1.6 lakh crore since the previous Diwali. Despite this extended selling phase, recent trends indicate that the tide may be turning.

FPI Outflows Weigh on Market Performance

The large-scale sell-off by FPIs has contributed to muted movement in Indian equities over the past year. The NSE benchmark Nifty 50 has stayed largely flat, underperforming other asset classes such as gold and cryptocurrency. 

This subdued performance has been linked to limited earnings growth and stretched valuations, which made investors seek opportunities in markets perceived as offering better returns.

From Samvat 2024 to September 2025, FPIs have steadily reduced exposure to Indian stocks, mainly due to valuations hovering around a price-to-earnings (P/E) ratio of 22 and a slowdown in corporate earnings. 

However, their participation in the primary market continues to show confidence in India’s long-term growth story. So far in 2025, foreign investors have invested nearly ₹46,000 crore through the primary market route.

Comparative Underperformance Against Global Markets

During this period, India has trailed behind other emerging markets such as China, Hong Kong, Taiwan, South Korea, and Brazil. Foreign investors have benefited from shifting funds towards these relatively cheaper markets. While this strategy helped them capture better short-term returns, recent moderation in selling suggests a potential shift in sentiment as global conditions stabilise.

Signs of Recovery in FPI Sentiment

The month of October has brought a change in trend, with FPIs turning net buyers once again. Inflows worth ₹653 crore have been recorded so far, breaking a three-month streak of continuous selling. 

This renewed interest could be a sign of stabilisation, especially as corporate earnings begin to find a floor and market valuations move closer to historical averages.

Read more: Dhanteras 2025: How to Buy Gold Mutual Funds?

Conclusion

As India enters Samvat 2082, there are growing expectations that foreign investor participation may strengthen. The normalisation of valuations and improving earnings outlook could pave the way for gradual revival in inflows. 

Although the market remains in a consolidation phase, long-term fundamentals such as domestic growth, policy stability, and sectoral expansion continue to provide a supportive backdrop for future investments.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

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