Foreign Institutional Investors (FIIs) have withdrawn approximately ₹1.16 lakh crore (around USD 13.23 billion) from Indian equities in 2025, with significant sell-offs primarily in the IT, FMCG, and Power sectors. This trend reflects a risk-averse stance among global investors due to factors like weak earnings, high valuations, and a weakening rupee. As of August 2025, the total withdrawal amounts to approximately ₹1.57 lakh crore (around USD 19 billion). This trend reflects a cautious approach among global investors due to various economic factors.
See Also
Export, FDI And FII Losses To India Due To 50% Tariff By U.S.
Monthly Breakdown Of FII Withdrawals
Sectors Affected By FII Withdrawals
Conversely, sectors like telecommunications and services have seen consistent inflows, indicating a shift in investor focus.
The primary factors contributing to this trend include:
(a) Weak Earnings: Disappointing corporate results have raised concerns about the health of companies.
(b) Global Economic Pressures: Issues like tariffs and a weakening rupee have made investors cautious.
(c) Market Volatility: Significant fluctuations in the market have prompted a shift towards small and mid-cap stocks.
(d) Geopolitical Concerns: Events such as U.S. tariffs have added to the uncertainty.
(e) Economic Conditions: Recession risks and high inflation in developed economies can prompt FIIs to seek safer investments.
(f) Interest Rates: Sharp interest rate hikes in developed markets make them more attractive compared to emerging markets like India.
(g) Economic Growth: Weak growth, high inflation, and fiscal deficits can erode confidence in the Indian market.
(h) Profit Booking: After strong market rallies, FIIs may sell to realise profits.
Impact Of FIIs Withdrawal On Stock Market Of India
FIIs withdrawals can lead to significant declines in stock prices, increased market volatility, and a depreciation of the Indian rupee. This outflow often results in lower investor confidence and can cause stock indices like Nifty 50 and Sensex to experience corrections of 10-20%.
Effects on Stock Market
(a) Decline in Indices: When FIIs withdraw funds, stock indices like Nifty 50 and Sensex often experience corrections ranging from 10% to 20%.
(b) Selling Pressure: The exit of foreign capital creates excess selling pressure, leading to a drop in stock prices.
(c) Rupee Depreciation: A decrease in dollar inflows results in a weaker rupee against the US dollar, affecting import costs and inflation.
(d) Rising Bond Yields: As FIIs sell off Indian assets, government securities (G-Sec) face increased selling pressure, causing bond yields to rise.
The withdrawal of FIIs from the Indian stock market can lead to significant declines in stock prices, currency depreciation, and rising bond yields. Understanding these impacts is crucial for investors navigating market fluctuations.The overall sentiment among FIIs remains cautious, driven by weak earnings, high valuations, and global economic pressures. While some sectors continue to attract investment, the trend of withdrawals highlights a significant shift in foreign investment strategies in India.