Foreign Portfolio Investors Withdraw from Indian Equities Amid High Valuations
Foreign Portfolio Investors (FPIs) have been net sellers in the Indian stock market for three consecutive months as of late 2024. In September 2024 alone, FPIs withdrew ₹23,885 crore. Analysts attribute this trend to disproportionately high valuations of Indian stocks, dull corporate earnings, and global uncertainties such as US tariff policies. Furthermore, there is a notable shift of funds towards the Chinese market, which is seen as having more attractive valuations. The weakening rupee against the dollar has also reduced the attractiveness of dollar returns from Indian equities, leading to cautious sentiment among global fund managers.
Key Points
- FPIs have pulled out approximately ₹1.54 lakh crore from Indian equities between January and September 2025.
- High valuations and stagnant corporate earnings have made Indian stocks less attractive compared to emerging peers like China.
- Global emerging market managers have cut India's allocation to 16.7%, the lowest since late 2023.
- The weakening rupee and potential US tariff changes are contributing to the volatility in FPI flows.
Exam Facts
- FPIs withdrew ₹23,885 crore in September 2024.
- India's allocation in GEM (Global Emerging Market) funds fell to 16.7% from a peak of 21%.
- As of August 2025, global funds held $390 billion in Indian assets.
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