Indian Stock Market: It seems foreign investors are still not in a mood to bet big on Indian equities. Overseas funds continued their selling spree, pulling out ₹34,733 crore in August after exiting ₹47,666 crore in July.
🔑 Key Takeaways
- FPIs sold over ₹1.60 lakh crore in 2025 so far.
- Shareholding of FPIs in Indian equities is at a 15-year low.
- DIIs and retail investors are cushioning the sell-off.
- US has imposed an additional 25% tariff on Indian goods (effective Aug 28, 2025).
🌍 Why Are FPIs Selling?
Foreign investors are booking profits and shifting money to other Asian markets due to:
- High valuations in Indian equities 📊
- Weak earnings visibility 🏭
- Fresh US tariffs on India 📦
FPIs are even cutting exposure in the bond market, though some investments continue via the primary/QIP route.
Despite the heavy selling, markets are holding up relatively well — thanks to strong domestic inflows from mutual funds and DIIs.
💬 Expert View: Divam Sharma, Green Portfolio PMS
❓ Will the new tariff hike accelerate FPI outflows?
“It’s unlikely that the recent tariff increase will drastically speed up outflows. FPIs have already reduced holdings in recent months, and much of the downside is already priced in. Markets are treating this as the new normal.”
He adds that:
- Geopolitical clarity is improving 🕊️
- Outflow momentum may slow down as markets adapt
- India’s long-term growth story continues to attract selective FPI inflows
📈 Where Global Investors Still See Opportunity
While export-oriented sectors face pressure, domestic-facing industries remain attractive:
- 🛍️ Retail & FMCG – rising consumer demand
- 📱 Electronics & Digital Services – rapid adoption
- 💳 Financial Services – strong credit growth
- 📈 India GDP forecast – >6% growth till 2026, fastest among major economies
Upcoming festive demand and continued reforms & digitalisation are expected to boost resilience and draw foreign direct investment in non-tariff-hit sectors.
🏦 Can DIIs and Retail Investors Balance FPI Outflows?
Yes — the domestic investor base is stronger than ever.
- DII ownership in Nifty 500: 19.2%
- Combined share of DIIs, retail & HNIs: 27.1% (record high, March 2025)
- SIP inflows remain robust, cushioning volatility 💪
Domestic institutions are focused on growth-driven sectors, ensuring that the market continues to hold ground despite FPI exits.
⚠️ Final Note
India’s stock market is facing short-term pressure from higher tariffs and FPI selling, but domestic liquidity, strong GDP growth, and rising consumption provide a strong foundation.
In the long run, India’s equity story remains intact — and investors who stay invested in domestic demand-driven sectors are likely to benefit.
👉 Disclaimer: This story is for educational purposes only. Views expressed are those of market experts, not ICCAN. Please consult certified advisors before making investment decisions.
