E-Paper
Foreign investors are on track to ditch India's stock market like never before
The FII outflows from India have also weighed on rupee, which has lagged most Asian peers this year, eroding the appeal of local-currency assets.
Indian equities are on track for record foreign outflows this year as concerns over US tariffs and weak earnings weigh on sentiment.
Overseas investors have pulled a net $16.8 billion from local shares this year through Sept. 26, nearing the record set in 2022, according to data compiled by Bloomberg. On Monday, the outflow stood at $319 million, provisional exchange data show.
The selloff has intensified this quarter after US President Donald Trump sharply raised H-1B visa fees, a move that hit technology firms reliant on the program. Analysts see little prospect of foreign inflows returning soon amid doubts over an early trade deal with the US and muted earnings growth.
“I doubt foreign flows would snap back in the near term,” said Charu Chanana, chief investment strategist at Saxo Markets. A durable reversal requires three things: clarity on US trade and immigration policy, a stable rupee, and evidence that earnings can justify valuations this fiscal year, she said.
The FII outflows have also weighed on the rupee, which has lagged most Asian peers this year, eroding the appeal of local-currency assets. The currency has dropped more than 3.5% against the dollar in 2025 and continues to hover near last week’s record low of 88.8025.
The selloff contributed to the NSE Nifty 50 Index’s rare stretch of underperformance versus regional peers. The benchmark has trailed the MSCI AC Asia Pacific Index for five straight months through September, the longest such run since 2013.
Even so, the Nifty is up 4.4% for the year and on track for its 10th straight annual gain thanks to relentless buying by domestic institutions. Local mutual funds and insurance firms have poured a record $66 billion this year, exceeding inflows of $63 billion in 2024, the data show.
