continued their selling spree in Indian markets, with net outflows totalling ₹14,323.37 crore across the four trading days from August 25-29, 2025, according to data from National Securities Depository Limited (NSDL).
The week began with modest net outflows of ₹881.36 crore on August 25, but selling pressure intensified dramatically in subsequent sessions. FPIs pulled out ₹726.50 crore on August 26, followed by the heaviest single-day outflow of ₹6,483.09 crore on August 28, and ₹6,132.42 crore on August 29.
Equity markets bore the brunt of foreign selling, with FPIs registering net outflows of ₹13,634 crore from equity investments during the four-day period. On August 25, equity witnessed net inflows of ₹340.16 crore, but this was quickly reversed with outflows of ₹1,555.13 crore, ₹5,650.28 crore, and ₹6,088.23 crore in the following three sessions respectively.
“Foreign institutional investors turned heavy sellers in the Indian equity markets during August 2025, pulling out almost $4 billion, the sharpest monthly outflow since February,” said Himanshu Srivastava, Associate Director – Manager Research, Morningstar Investment. “The withdrawals were triggered by a combination of global and domestic factors.”
The debt segment presented a mixed picture during the week. While Debt-General Limit category attracted net inflows of ₹721.05 crore across the four days, the Debt-FAR (Foreign Access Route) category witnessed significant outflows totaling ₹1,442.08 crore. The Debt-VRR (Voluntary Retention Route) segment saw net outflows of ₹529.04 crore during the period.
Stock exchange transactions dominated the FPI activity, accounting for the majority of flows across all asset classes. Total gross purchases through stock exchanges reached ₹85,964.86 crore during the four trading days, while gross sales amounted to ₹102,688.16 crore.
“The announcement of steep US tariffs of up to 50 per cent on Indian exports dented sentiment significantly, raising concerns over India’s trade competitiveness and growth outlook,” Srivastava noted. “At the same time, corporate earnings for the June quarter for a few key sectors fell short of expectations, further dampening investor appetite.”
The rupee weakened against the dollar during the week, with the conversion rate moving from ₹87.4375 per dollar on August 25 to ₹87.6559 on August 29, reflecting the broader risk-off sentiment in Indian markets.
Mutual fund investments by FPIs remained minimal, with net inflows of just ₹55.50 crore across the four-day period. Equity mutual fund schemes attracted ₹11.25 crore in net inflows, while debt schemes saw inflows of ₹45 crore.
Market experts attributed the sustained selling to multiple headwinds. “Indian equities continued to trade at premium valuations compared with other emerging markets, making them vulnerable to profit-taking and reallocation of capital towards relatively cheaper markets,” Srivastava explained.
The derivative segment also reflected the cautious sentiment, with FPIs’ open interest in index options declining from ₹344,785.83 crore on August 25 to ₹220,569.04 crore by August 29. Stock futures open interest decreased from ₹393,518.73 crore to ₹374,044.82 crore during the same period.
“Together, these factors created a risk-off environment where FIIs trimmed exposure, leaving August as one of the toughest months for Indian equities in 2025,” Srivastava added, highlighting the broader context of monthly outflows.
The sustained FPI outflows come at a time when Indian benchmark indices have been under pressure, with technical indicators suggesting continued bearish sentiment in the near term. The week’s data underscores the challenges facing Indian markets amid global uncertainty and domestic valuation concerns.
Primary market investments provided some relief, with net inflows of ₹546.82 crore during the four trading days, though this was insufficient to offset the massive outflows through stock exchange transactions.