Foreign Investors Pull ₹12,569 Crore from Indian Equities in November as Risk-Off Sentiment Deepens

FPIs Resume Selling Spree Amid Global Volatility

Foreign portfolio investors (FPIs) have pulled out ₹12,569 crore from Indian equities so far in November, marking a sharp reversal from the inflows recorded in October. The renewed exodus comes as global risk appetite wanes and investors shift capital toward markets perceived to benefit from the ongoing AI-led tech rally.

According to data from depositories, FPIs had pumped in ₹14,610 crore last month after four consecutive months of heavy outflows — ₹23,885 crore in September, ₹34,990 crore in August, and ₹17,700 crore in July.

Market analysts attribute the reversal to a combination of weak global cues, profit-taking, and reallocation of funds toward advanced economies where technology-led growth remains the primary theme.

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India Seen as an ‘AI Underperformer’

V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said that 2025 has seen a clear divergence in FPI behavior. “Hedge funds are selling in India while buying in markets like the U.S., China, South Korea, and Taiwan — all seen as direct beneficiaries of the AI boom,” he noted.

According to Vijayakumar, the perception that India is lagging behind in the artificial intelligence race is shaping investor sentiment. However, he cautioned that valuations in AI-linked sectors globally are becoming “stretched,” which could spark a correction and limit the pace of withdrawals from emerging markets like India.

“If this realisation strengthens and India’s earnings trajectory continues to improve, FPIs may turn buyers again in the coming months,” he added.

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Global Sell-Off Weighs on Asian Markets

Echoing similar views, Vaqarjaved Khan, Senior Fundamental Analyst at Angel One, said that the first week of November saw FPIs dumping Indian equities worth ₹12,569 crore as part of a broader sell-off in technology and growth stocks across Asia.

He noted that India Inc’s Q2 FY26 earnings were slightly above expectations, particularly in the midcap segment, but global headwinds — including high U.S. bond yields and uncertainty around monetary policy — are keeping investors wary.

“Flows could turn selective as the earnings season progresses, with buying likely in sectors showing resilience in margins and growth,” Khan said.

So far in 2025, FPIs have withdrawn over ₹1.5 lakh crore from Indian equities — underscoring persistent foreign caution despite India’s strong domestic growth story.

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Debt Market Sees Mixed Trends

In the debt market, FPIs withdrew ₹1,758 crore under the general investment limit while simultaneously investing ₹1,416 crore through the Voluntary Retention Route (VRR), which offers greater stability and reduced volatility.

Experts said the mixed flows suggest that long-term investors remain engaged but are adopting a defensive stance amid expectations of tighter global liquidity.

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Indian Markets End Week Flat

Despite the heavy foreign outflows, Indian benchmarks showed resilience last week. On Friday, markets pared early losses to close nearly flat, supported by late buying in financial and metal stocks.

The Nifty50 ended at 25,492.30, down 17.40 points (0.07%), while the S&P BSE Sensex settled at 83,216.28, down 94.73 points (0.11%).

Both indices recorded their second consecutive weekly decline, losing around 0.9%, while Nifty Bank gained marginally by 0.12%. Broader markets remained subdued — the Nifty Midcap 100 closed flat, and the Nifty Smallcap 100 fell 1.7%.

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Outlook: Short-Term Pressure, Long-Term Opportunity

Analysts believe the near-term outlook for Indian equities will depend on global risk sentiment, crude oil trends, and foreign fund behavior. However, India’s robust macroeconomic fundamentals, improving corporate earnings, and domestic retail participation continue to provide long-term support.

“While foreign investors are cautious for now, India remains a structural growth story,” said Vijayakumar. “If the U.S. Federal Reserve signals a rate cut cycle early next year, we could see renewed inflows.”