Foreign Investors Withdraw Nearly ₹1 Lakh Crore from Indian Markets in 2025 So Far
The Indian stock market has been facing a significant outflow of foreign investment this year, with foreign portfolio investors (FPIs) withdrawing nearly ₹1 lakh crore from the country’s markets in the first 1.5 months of 2025 alone. According to data from National Securities Depository Limited (NSDL), this massive sell-off is a cause for concern for the Indian economy.
In the week from February 10 to February 14, FPIs sold Indian equities worth a staggering ₹13,930.48 crore, which is a significant increase from the previous week’s outflow of ₹9,144.42 crore. This sell-off has led to a decline in the Indian market’s performance, with the Sensex and Nifty indices experiencing a significant dip.
The current outflow of foreign investment is not a new phenomenon, as FPIs had withdrawn ₹78,027 crore from the Indian stock market in January alone. This massive sell-off in January was attributed to various factors, including the ongoing conflict between Russia and Ukraine, which had led to a rise in global uncertainty and volatility.
The current outflow of foreign investment is also attributed to various other factors, including the tightening of monetary policy by the Reserve Bank of India (RBI), which has led to an increase in interest rates. This has made Indian assets less attractive to foreign investors, who are now opting for more stable and lucrative investment options.
Another factor that has contributed to the outflow of foreign investment is the decline in the Indian economy’s growth rate. The Indian economy has been facing a slowdown in recent years, which has led to a decline in investor confidence. Foreign investors are now opting for more stable economies, such as the United States, which has a strong growth rate and a more stable political environment.
The outflow of foreign investment has also led to a decline in the value of the Indian rupee, which has depreciated against the US dollar. This decline in the value of the rupee has made Indian exports more expensive, which could lead to a decline in exports and a negative impact on the economy.
The current outflow of foreign investment is a cause for concern for the Indian government, which is now trying to stabilize the market and attract foreign investment back to the country. The government has taken various measures to stabilize the market, including the announcement of a stimulus package and the relaxation of foreign direct investment (FDI) norms.
The government has also been trying to boost investor confidence by announcing various reforms and initiatives. For example, the government has announced plans to reform the country’s bankruptcy law, which has been a major hurdle for foreign investors looking to invest in India.
The government has also been trying to boost investor confidence by announcing various initiatives to improve the country’s business environment. For example, the government has announced plans to simplify the country’s taxation system and reduce the complexity of regulations.
Despite these efforts, the outflow of foreign investment is expected to continue in the near term. Foreign investors are likely to remain cautious and will continue to monitor the Indian economy’s growth rate and the government’s policies before making any investment decisions.
In conclusion, the outflow of foreign investment from Indian markets in 2025 is a cause for concern for the Indian economy. The government needs to take immediate measures to stabilize the market and attract foreign investment back to the country. The government’s efforts to reform the country’s bankruptcy law and simplify the taxation system are steps in the right direction. However, more needs to be done to boost investor confidence and stabilize the market.
