FPIs Withdraw ₹17,741 Crore from Indian Equities in July, First Outflow in Four Months

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Foreign portfolio investors (FPIs) pulled out ₹17,741 crore from Indian equities in July, marking the first monthly outflow after three consecutive months of net inflows, according to data from the National Securities Depository Limited (NSDL).

The reversal was driven largely by heavy selling in the final week of the month. Between July 28 and August 1 alone, FPIs sold ₹17,390.6 crore worth of shares, pushing overall July flows into negative territory.

Analysts attribute the sharp exit to a mix of global and domestic factors, including renewed trade tensions after the United States announced a 25 percent tariff on Indian exports, weakness in the rupee, and caution over corporate earnings.

While equities saw large-scale withdrawals, FPIs maintained interest in India’s debt market, particularly through the Reserve Bank of India’s Fully Accessible Route for sovereign bonds. This indicates that despite near-term concerns, foreign investors continue to have confidence in India’s broader macroeconomic fundamentals.

The shift in sentiment follows a strong April to June period, when FPIs invested ₹38,673 crore in equities. Earlier in the year, January to March had seen heavy selling totaling ₹1,16,574 crore. With July’s outflow, cumulative equity withdrawals for 2025 now exceed ₹1,01,795 crore.

Sectorally, selling pressure was concentrated in large-cap stocks, especially in export-oriented sectors expected to be affected by the new U.S. tariffs. Domestic institutional investors (DIIs), including mutual funds, absorbed some of the selling pressure by continuing to buy, helping cushion market volatility.

Market experts say the scale of last week’s selling highlights the sensitivity of foreign investors to geopolitical and policy developments. They note that while short-term volatility is likely to persist, strong domestic demand, fiscal stability, and resilient credit growth could help steady flows in the coming months.