Share Market News / In August, FPIs sold shares and withdrew Rs 20,975 crore, this much selling has been done this year

Share Market News: Foreign portfolio investors (FPIs) are withdrawing capital from the Indian stock market in a big way in August 2025. According to depository data, till August 14, FPIs have made net withdrawals by selling shares worth Rs 20,975 crore. This withdrawal is part of the total withdrawal of Rs 1.16 lakh crore so far in the year 2025. In this article, we will analyze the reasons for this withdrawal, its effects and future prospects.

Major reasons for withdrawal

Several factors are responsible for the FPI sell-off:

US-India trade tensions: Uncertainty over tariffs and India's response to US policies has affected the FPI strategy. However, according to Waqar Javed Khan, CFA, Angel One, the reduction in tensions between the US and Russia and the absence of new sanctions make the proposed 25% additional tariff on India less likely to be imposed. This is a positive sign for the market.

Weak results of companies: Weaker than expected performance of companies in the first quarter and high valuations have prompted FPIs to sell. V.K. Vijayakumar, Chief Investment Strategist, Geojit Investments, said that high valuations increase the risk for investors.

Rupee fall and dollar strength: The recent strength of the US dollar has reduced the attractiveness of emerging markets like India. According to Himanshu Srivastava, Associate Director, Morningstar Investment Research India, global uncertainties and geopolitical tensions have weakened the risk appetite.

Global uncertainties: Uncertainty over the interest rate stance in the US and other developed economies has affected the strategy of FPIs. This reflects caution towards investing in emerging markets.

Overview of FPI activities

• Withdrawals in July 2025: According to depository data, FPIs had made net sales of Rs 17,741 crore in July.
• Investments in March-June 2025: In contrast, FPIs invested Rs 38,673 crore between March and June, indicating a positive trend in the market.
• Investments in the bond market: FPIs invested Rs 4,469 crore under the normal limit and Rs 232 crore under the voluntary retention route during the period under review.

Positive signals

• Some factors are giving positive signals for the market:
• Improvement in S&P rating: S&P has raised India's credit rating from BBB- to BBB, which may strengthen FPI sentiment.
• Reduction in tariff uncertainty: With the possibility of additional tariffs being imposed after August 27 decreasing, the market may stabilize.

Future prospects

The strategy of FPIs will depend on global and local factors. If geopolitical tensions subside and the rupee stabilizes, the pace of FPI selling may slow down. Additionally, India's better credit rating and improving corporate performance may boost investor confidence.