After nearly two weeks of persistent outflows, foreign portfolio investors (FPIs) turned net buyers in the Indian equity market on September 9, pumping in ₹2,050 crore, according to NSDL data. This follows cumulative sales of over ₹30,000 crore over the past 11 sessions.

The rebound came on the back of robust buying in IT stocks, supported by favourable global cues and renewed investor confidence in large-cap counters.

“Global equity optimism, driven by expectations of U.S. Federal Reserve interest rate cuts and strong recent performances of U.S. tech indices like the Nasdaq, created a tailwind for domestic technology stocks,” said Vaibhav Vidwani, Research Analyst at Bonanza.

So far in 2025, FPIs have withdrawn ₹2.22 lakh crore from Indian equities on a year-to-date (YTD) basis. NSDL data shows they have been net buyers in four months and net sellers in another four.

On a month-to-date basis, FPIs have sold equities worth ₹5,786 crore after pulling out ₹46,903 crore in August and ₹47,667 crore in July. January saw the steepest outflow of ₹87,375 crore, followed by ₹58,988 crore in February. On the positive side, inflows were recorded in March (₹2,014 crore), April (₹2,735 crore), May (₹11,773 crore), and June (₹7,489 crore).

Analysts attribute the volatility in foreign flows to global headwinds such as rising U.S. interest rates, a stronger dollar, and relative valuation concerns.

“Investors should understand that the major challenge the market faces now is high valuations, particularly in the broader market, which constrain any potential rally. India is hugely underperforming other markets. For instance, while Hang Seng and Kospi delivered 51% and 31% returns in the past year, the Nifty delivered -0.69%: a huge underperformance,” said V.K. Vijayakumar, Chief Investment Strategist at Geojit Investments.

“Massive sustained selling by FIIs, triggered by high Indian valuations, is the principal reason for this underperformance. FIIs who sold in India and moved money to other markets have gained. Therefore, they might do it again. A change in this trend will happen only when indications of an earnings recovery emerge," he added.

In contrast, domestic institutional investors (DIIs) have continued to support Indian equities, with net investments of ₹16,541 crore so far in September. Overall, DIIs have infused more than ₹5 lakh crore into the market in CY25, remaining net buyers in all eight months this year. They have consistently poured funds into equities since July 2023.

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