FPIs Pull Out Nearly Rs 18,000 Crore in Two Weeks of December: Market Sentiment Under Pressure

Foreign Portfolio Investors (FPIs) have turned net sellers in Indian equities, withdrawing close to Rs 18,000 crore in just the first two weeks of December 2025. This sharp reversal in foreign flows has rattled investor sentiment, raising concerns about the near-term outlook for the domestic stock market.

The short headline, “FPIs pull out nearly Rs 18,000 crore in two weeks of December”, highlights the scale of the outflow and its potential impact on India’s financial markets.

Background of FPI Outflows

• FPIs have been major drivers of liquidity in Indian markets, often influencing both short-term momentum and long-term valuations.
• The sudden withdrawal in December follows months of steady inflows, suggesting a shift in global risk appetite.
• Analysts attribute the outflows to rising U.S. bond yields, global inflationary pressures, and geopolitical uncertainties.
• Concerns about stretched valuations in Indian equities have also contributed to profit-booking by foreign investors.

Sectoral Impact of FPI Selling

FPI Flow Trends

This pivot analysis shows how quickly sentiment has shifted from bullish inflows to sharp outflows, underscoring the volatility of foreign capital.

Why FPIs Are Selling

• Global bond yields rising: Higher returns in U.S. treasuries are pulling money away from emerging markets.
• Inflation concerns: Persistent inflation in developed economies is prompting central banks to maintain tighter policies.
• Geopolitical risks: Uncertainty in global trade and conflicts has made investors cautious.
• Valuation worries: Indian equities are trading at premium valuations compared to peers, leading to profit-booking.

Impact on Indian Markets

• Equity indices: Benchmarks like Nifty and Sensex have seen increased volatility, with banking and IT stocks under pressure.
• Rupee movement: The Indian currency has weakened slightly against the U.S. dollar due to capital outflows.
• Bond market: Domestic yields have risen marginally as foreign investors trimmed exposure.
• Liquidity: Short-term liquidity in the equity market has tightened, affecting retail investor sentiment.

Investor Lessons

1. Diversification is key: Reliance on foreign flows can create volatility; domestic investors should diversify across asset classes.
2. Focus on fundamentals: Strong earnings and resilient sectors like FMCG and pharma may withstand foreign selling.
3. Monitor global cues: U.S. monetary policy and bond yields remain critical drivers of FPI behavior.
4. Long-term perspective: Despite short-term volatility, India’s growth story remains intact, offering opportunities for patient investors.

Broader Economic Context

• India continues to post strong GDP growth, supported by domestic consumption and infrastructure spending.
• Corporate earnings remain robust, though global headwinds could temper growth in export-oriented sectors.
• The government’s push for manufacturing and digital transformation is expected to attract long-term foreign investment, even if short-term flows remain volatile.

Conclusion

The withdrawal of nearly Rs 18,000 crore by FPIs in just two weeks of December 2025 underscores the vulnerability of Indian markets to global factors. While domestic fundamentals remain strong, external pressures such as rising U.S. yields and inflation concerns are driving foreign investors to reassess their positions. For Indian investors, the key lies in maintaining discipline, focusing on resilient sectors, and preparing for continued volatility in the months ahead.

Disclaimer

This article is intended for informational purposes only and does not constitute investment advice. Stock market investments are subject to risks, including global economic factors and capital flow volatility. Readers are advised to consult financial experts before making investment decisions. The author and publisher are not responsible for any financial losses arising from actions taken based on this article.