FPIs Pull Rs 8,749 Crore from Indian Equities in June Amid Global Tensions
Foreign Portfolio Investors (FPIs) turned net sellers, withdrawing Rs 8,749 crore from Indian equities in June's first week, contrasting with May's Rs 19,860 crore investment. This outflow, attributed to US-China trade tensions, rising US bond yields, and an Adani Group investigation, brings the 2025 total FPI withdrawal to Rs 1.01 lakh crore. FPIs also pulled Rs 6,709 crore from debt general limit and Rs 5,974 crore from debt voluntary retention.
Unpacked:
FPIs are investors who invest in a country’s financial assets—like stocks and bonds—without direct control over businesses. Their actions are significant because sudden large inflows or outflows can impact market liquidity, stock prices, and currency stability, affecting both investor sentiment and the broader Indian economy.
Rising US bond yields make US assets more attractive by offering higher returns with lower risk. This can prompt FPIs to withdraw money from emerging markets like India and reinvest in US markets, leading to outflows from Indian equities and bonds.
FPI outflows can trigger stock market declines, cause the Indian rupee to depreciate, and raise borrowing costs. However, strong domestic institutional and retail participation often cushions the market, though persistent outflows may still hurt investor confidence and economic growth.
The Adani Group is one of India’s largest conglomerates and a significant market player. Investigations into its practices raise concerns about corporate governance and market transparency, causing FPIs to adopt a cautious approach toward Indian equities due to perceived higher risks.