Foreign investors pull out Rs 4,784 crore from Indian equities this week amid volatile bond markets

As of this week, total FPI investment for the month has dropped to Rs 13,835 crore, a decline from the Rs 18,620 crore recorded the previous week. Representational pic

Foreign Portfolio Investors (FPIs) turned net sellers in the Indian equity markets this week, offloading shares valued at Rs 4,784.32 crore between May 19 and 23, as per data released by the National Securities Depository Ltd (NSDL).

This wave of selling has significantly dented the overall net inflows for May. As of this week, total FPI investment for the month has dropped to Rs 13,835 crore, a decline from the Rs 18,620 crore recorded the previous week. This reflects that nearly Rs 4,800 crore was withdrawn by foreign investors over just five trading sessions.

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The heaviest selling occurred on Wednesday, May 21, when FPIs offloaded more than Rs 10,000 crore worth of shares in a single day. Interestingly, the week had begun on a positive note with healthy inflows on both Monday and Tuesday.

As a result of this week's selloff, cumulative net investments by FPIs in Indian equities for 2025 now reflect an overall net outflow of Rs 98,516 crore. The data suggests that foreign investors remain cautious in the face of ongoing global uncertainties.

Market experts believe that the current trend may not be driven by domestic market fundamentals, but rather by global economic pressures. A key factor cited is the volatility in international bond markets.

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Ajay Bagga, a banking and market expert, told ANI, "This one of an up-down flow points to the turmoil in global bond markets impacting leveraged funds or carry trade funds to pull out some profits from the Indian markets to cover liquidity needs elsewhere."

He further added, "Another possibility is the gaming of option pricing by FPIs who came to move option premiums by buying and selling the underlying shares in the cash markets. That may explain why index heavyweights saw selling on particular days and why sharp reversals happened in the markets on two days."

Analysts interpret these movements as instances of ‘hot money', fast-moving, speculative capital, rather than an indication of weakening economic fundamentals in India.

NSDL data also showed that net investments by FPIs stood at Rs 4,223 crore in April, suggesting a short-term revival in foreign interest. In contrast, FPIs had sold shares worth Rs 3,973 crore in March, and significantly larger amounts of Rs 78,027 crore in January and Rs 34,574 crore in February.