Mumbai: Foreign portfolio investors (FPIs) are continuing to pull money out of Indian stock markets. In September 2025, they sold shares worth Rs 23,885 crore — the third month in a row of heavy selling.

So far this year, the total FPI outflow has reached a massive Rs 1.6 lakh crore (around USD 17.6 billion), according to depository data.

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What’s Driving the Exit?

Experts say multiple reasons are behind this selling spree. One big factor is new US policies, including tariff hikes of up to 50 percent on Indian goods and a new USD 100,000 H-1B visa fee. This has made foreign investors cautious, especially about sectors like IT and exports.

The rupee falling to an all-time low also added to the problem, increasing the currency risk for foreign investors. In addition, Indian stock valuations have been high, making other Asian markets look more attractive.

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Any Signs of a Turnaround?

Some market experts remain hopeful. Valuations are becoming more reasonable, and policy changes like a possible GST rate cut and pro-growth monetary steps could help improve sentiment.

'India is still the fastest-growing major economy,' said Vaqarjaved Khan from Angel One. He believes that upcoming earnings results and economic data will be crucial in deciding whether FPIs return.

Himanshu Srivastava of Morningstar added that for FPIs to come back, India needs stable currency, clear trade policies, and strong earnings visibility.

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Debt Market Tells a Different Story

Interestingly, while FPIs are selling stocks, they are investing in Indian debt. In September, they put Rs 1,085 crore under the general limit and Rs 1,213 crore via the voluntary retention route.

VK Vijayakumar from Geojit said FPIs have shifted money to other markets that gave better returns, as Indian stocks have underperformed globally this year.