extended their selling streak in Indian markets, withdrawing a net ₹10,486.85 crore ($1,202.82 million) over four trading days from September 1-4, 2025, according to National Securities Depository Limited (NSDL) data. The sustained outflow reflects mounting global uncertainties and valuation concerns that have kept foreign investors cautious about Indian equities.
The heaviest single-day outflow occurred on September 1, when FPIs pulled out ₹7,715.43 crore ($878.25 million), marking the most significant withdrawal during the period. This was followed by net outflows of ₹2,621.77 crore ($297.06 million) on September 2 and ₹445.76 crore ($50.59 million) on September 4. September 3 provided the only respite with net inflows of ₹1,277.06 crore ($145.08 million).
Equity markets bore the brunt of foreign selling, with FPIs withdrawing ₹11,256.93 crore across the four trading sessions. The equity segment saw consistent outflows on three of the four days, with September 1 recording the highest single-day equity withdrawal of ₹8,982.89 crore. Even on September 3, when overall FPI flows turned positive, equity investments remained negative at ₹937.05 crore.
“Indian equity markets witnessed sustained foreign institutional investor outflows totaling over USD 1.4 billion through the week, extending the selling pressure that began in August,” said Himanshu Srivastava, Associate Director – Manager Research, Morningstar Investment. “Multiple factors contributed to this risk-off sentiment — a stronger dollar, renewed US tariff threats, and continuing geo-political tensions added to global uncertainty.”
The debt segment presented a mixed picture during the four-day period. While general limit debt instruments faced net outflows of ₹197.41 crore, the Fully Accessible Route (FAR) debt category attracted significant inflows of ₹4,518.36 crore, providing some cushion to overall debt flows. The Voluntary Retention Route (VRR) debt segment saw net outflows of ₹1,006.53 crore over the period.
September 5 marked a settlement holiday for certain transactions due to the Eid-e-Milad festival, though the National Stock Exchange and Bombay Stock Exchange remained open for trading. While orders could be placed, the clearing and settlement of funds and stocks were closed, affecting profits from intraday equity trades and credits from F&O and Currency derivatives from September 4.
“Domestically, slowing corporate earnings momentum and concerns over high valuations — Indian equities continue to trade at a premium to other emerging markets — prompted FIIs to book profits and reduce exposure,” Srivastava added. The sustained selling pressure has contributed to market volatility, with the Nifty 50 trading in a tight range despite posting weekly gains.
Market experts noted that FPI positioning in derivatives remained cautious throughout the period. The derivative trading data for September 5 showed index futures open interest at 224,731 contracts worth ₹41,801.44 crore, while index options open interest stood at 1,791,589 contracts valued at ₹3,31,740.34 crore.
“FIIs have pulled out nearly ₹94,600 crore from the cash market over the last two months,” observed Sudeep Shah, Head – Technical Research and Derivatives at SBI Securities. “Sentiment has been weighed down by factors such as US–India trade tensions, weak corporate earnings, a depreciating rupee, and the possibility of a rate cut by the Federal Reserve.”
The rupee weakened marginally during the period, with the USD-INR conversion rate moving from ₹87.85 on September 1 to ₹88.11 on September 4. This currency movement added to the pressure on foreign investors’ returns from Indian investments.
Mutual fund investments by FPIs remained volatile, swinging from net outflows of ₹824.90 crore on September 2 to modest inflows of ₹65.73 crore on September 1 and ₹14.85 crore on September 4. The Alternative Investment Fund (AIF) segment saw minimal activity, with only ₹3.01 crore in net inflows on September 4.
“While near-term volatility may persist, India’s structural growth story, policy reforms such as GST rationalisation, and expectations of an earnings revival could bring FIIs back once global uncertainties ease,” Srivastava noted. “For now, foreign investors appear to be in a wait-and-watch mode, balancing India’s long-term potential against short-term macro and valuation risks.”
The sustained FPI outflows contrast sharply with domestic institutional investor behaviour, with market participants noting that DIIs have been providing crucial support to Indian markets amid foreign selling pressure. The divergent flows highlight the ongoing tug-of-war between domestic and foreign investor sentiment in Indian equities.