Foreign portfolio investors (FPIs) extended their selling streak in September 2025, offloading Indian equities for a third consecutive month as they shifted capital to markets with cheaper valuations. Data from the National Securities Depository Ltd (NSDL) showed net FPI outflows of ₹23,885 crore from Indian equities in September, taking the total outflow in the calendar year through October 7 to over ₹1.61 lakh crore.
Heightened US tariff tensions, a recent hike in , stretched Indian stock market valuations, weak earnings growth, and a depreciating rupee prompted overseas investors to turn risk-averse. Notably, FPIs pared exposure to defensive sectors such as IT, pharma and FMCG, while selectively adding to cyclicals like auto, capital goods and metals.
“Elevated equity valuations in India when compared to other emerging markets have triggered profit booking and capital reallocation, culminating in the third consecutive month of net selling within the Indian stock market. However, it is noteworthy that investors continue to engage in the primary market, thereby increasing their allocations to new sectors and emerging themes, which reflects a commitment to identifying potential growth opportunities,” said Vipul Bhowar, Senior Director, Head of Equities, Waterfield Advisors.
Top Sectors FPIs Bought in September 2025
Automobile and Auto Components sector emerged as the biggest beneficiary of FPI inflows in September, with investors pumping ₹3,641 crore into the sector. Strong domestic demand amid the and festive season expectations supported the sector’s appeal.
The capital goods sector attracted ₹3,010 crore from , reflecting optimism around India’s manufacturing push, higher government and private capex, and rising order books.
FPIs turned net buyers in metals and mining, investing ₹1,840 crore in the sector. During the first fortnight of the month, FPI inflows into the sector was ₹1,394 crore, with ₹446 crore coming in the second half of the month.
Despite some mid-month volatility, FPIs remained modestly positive in the financial services sector, with inflows worth ₹992 crore. The buying was largely concentrated in first half of the month.
Construction stocks saw renewed interest, garnering ₹856 crore during the month.
Top Sectors FPIs Sold the Most in September 2025
Healthcare sector topped the sell list, with FPIs withdrawing ₹6,122 crore amid concerns over . FPIs sold pharma stocks worth ₹1,601 crore during the first half of September, and offloaded shares worth ₹4,521 crore during the second fortnight of the month.
The Information Technology (IT) sector continued to face selling pressure, with ₹6,050 crore in outflows amid concerns over hike in H-1B visa fees.
Fast-Moving Consumer Goods (FMCG), traditionally considered defensive, saw net FPI selling of ₹4,202 crore last month. FPI outflow from the FMCG sector stood at ₹1,092 crore during the first half, which intensified to ₹3,110 crore in the second half of the month.
Consumer durables saw significant exits worth ₹3,627 crore, followed by Consumer Services sector with FPIs outflow of ₹3,360 crore.
FPIs outflow was also seen in Power ( ₹2,693 crore), Telecom ( ₹2,422 crore), and Realty ( ₹2,259 crore) sectors.
The September trend highlights a clear rotation in FPI strategy — exiting defensives like IT, pharma and FMCG, and shifting towards economically sensitive sectors such as autos, capital goods and metals.
VK Vijayakumar, Chief Investment Strategist, Geojit Investments said that the FII strategy of selling in India and moving the money to other markets have paid rich dividends to FIIs since India has been underperforming most markets during the last one year with one-year return in negative territory.
“Higher valuation in India and cheaper valuations elsewhere have been the principal drivers behind the FII strategy. Now that the valuation differential has come down and Indian earnings are likely to improve in FY27, FIIs are likely to slowdown selling, going forward,” said Vijayakumar.
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