Sun Dec 07 06:41:50 UTC 2025: Summary:
Foreign Portfolio Investors (FPIs) withdrew ₹11,820 crore ($1.3 billion) from Indian equities in the first week of December 2025, driven by the rupee’s depreciation. This follows a net outflow in November, after a brief pause in October. Analysts attribute the renewed selling to currency concerns, year-end portfolio repositioning, and delays in the India-U.S. trade deal. However, strong domestic institutional investment (DIIs) of ₹19,783 crore cushioned the market impact. The RBI’s recent rate cut and improved growth outlook boosted sentiment, with predictions of further gains if the U.S. Federal Reserve cuts rates. FPIs had mixed activity in the debt market.
News Article:
Rupee Woes Trigger $1.3 Billion Foreign Investor Exodus from Indian Equities
NEW DELHI, December 7, 2025 – Foreign investors have pulled a significant ₹11,820 crore ($1.3 billion) from Indian equities in the first week of December, signaling growing concerns over the weakening rupee. According to data from NSDL, this outflow follows a ₹3,765 crore withdrawal in November and brings the total FPI exodus for 2025 to a substantial ₹1.55 lakh crore ($17.7 billion).
Analysts point to the rupee’s nearly 5% depreciation this year as the primary driver for the sell-off, alongside typical year-end portfolio repositioning. “Delays in finalizing the India-U.S. trade deal have further dampened global sentiment,” added Vaqarjaved Khan, Senior Fundamental Analyst at Angel One.
However, the impact on the Indian market has been significantly cushioned by robust domestic participation. Domestic Institutional Investors (DIIs) stepped up to buy equities worth ₹19,783 crore during the same period, completely offsetting the foreign selloff. DII confidence is buoyed by strong GDP numbers and expectations of improved corporate earnings.
A recent move by the Reserve Bank of India (RBI) appears to have injected some positivity into the market. The central bank’s 25 bps rate cut on December 5, coupled with an upward revision of FY26 growth guidance to 7.3% and a reduction in the CPI forecast to 2%, resulted in a positive FPI flow of ₹642 crore on that day alone.
Looking ahead, analysts suggest that a potential interest rate cut by the U.S. Federal Reserve could further benefit Indian equities. “The CME Fed Watch Tool indicates that the FOMC is expected to cut rates by 25 bps next week, a move that typically benefits risk assets worldwide,” said one analyst. However, the absence of a completed India-U.S. trade deal remains a key risk factor.
In the debt market, FPI activity was mixed, with a ₹250 crore investment under the general limit and a ₹69 crore withdrawal through the voluntary retention route.
First Piper 