Foreign investors withdrew a record Rs 1.58 lakh crore from Indian stocks in 2025; will they return in 2026?

News Topical, Digital Desk : Foreign portfolio investors (FPIs) have withdrawn ₹1.58 trillion so far in 2025, the highest ever in the history of Indian stock markets. These withdrawals were primarily driven by currency fluctuations, uncertainty related to global trade tensions and US tariffs, and high valuations, leading foreign investors to adopt a risk-averse approach. However, FPI investment is expected to turn sustainably positive in 2026.

According to data from the National Securities Depository Limited (NSDL), FPIs have withdrawn ₹1,58,409 crore from Indian equities as of December 26. They have also invested ₹59,390 crore in the debt or bond markets. Withdrawals in 2025 surpassed the 2022 record, when FPIs withdrew a record ₹1.21 lakh crore from Indian equities. On a monthly basis, FPIs sold shares in eight out of 12 months in 2025. FPI sales were supported by strong buying by domestic institutional investors.

Unlike equities, FPIs showed a clear preference for debt. During the year, FPIs withdrew the most from financial services and IT, while healthcare and manufacturing attracted investment.

We expect FPIs to return to India sustainably as nominal growth and incomes improve in calendar year 2026. Concluding a trade deal with the US will narrow tariff gaps, while Fed rate cuts will keep the dollar weak, benefiting emerging market assets. In addition to global support, domestic factors could also play a key role in reviving FPI investment. - Garima Kapoor, Vice President of Research and Economist, Elara Securities India 

Indian income growth, policy continuity and reforms could act as key factors, said Vikas Gupta, CEO and chief investment strategist at Omniscience Capital.

FPI activity in the next year, 2026, will be influenced by the direction of global interest rates and tariff-related developments. Declining US bond yields and a weak dollar could help revive FPI flows into equities. Himanshu Srivastava, Principal Research Manager, Morningstar Investment Research India

FPI withdrawals surged in the fourth week of December, according to FPI data. FPI withdrawals rose to ₹14,734 crore in the fourth week of December (December 22-26). Total FPI withdrawals for the third week ended December 19 were ₹14,185 crore.

How much was the FPI investment in which month in 2025?

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