FPIs pulled $2.7B from Indian stocks in Sept., driving 2025 toward record outflows amid global headwinds.

Foreign portfolio investors pulled $2.7 billion from Indian stocks in September, continuing a three-month selling streak and pushing 2025 toward record annual outflows. Year-to-date, FPIs have exited $17.6 billion, the second-highest nine-month total on record. Factors include a 4% one-year decline in the Nifty, U.S. tariffs on Indian goods, higher H-1B visa fees, and geopolitical tensions. The IT sector saw $7.2 billion in outflows, while investors shifted toward China and other Asian markets with stronger earnings and lower trade barriers. Indian indices underperformed, rising just 4.1% and 2.7% compared to 22% and 24.6% gains in broader markets. Despite weak foreign sentiment, Indian equities now trade at more attractive valuations, and potential tax cuts and pro-growth policies may reverse the trend in late 2025 and early 2026.