In 2025 so far, foreign institutional investors (FIIs) have withdrawn approximately Rs 1,52,479 crore from Indian equities. Notably, around Rs 12,569 crore of this outflow happened in November alone.
Analysts attribute the heavy exit in part to investors redirecting capital toward global themes such as artificial intelligence (AI), which they believe may offer higher growth potential than some emerging‑markets exposure. At the same time, concerns are growing that parts of the AI/tech complex may have become overvalued, raising questions about whether a “bubble” could reverse the trend.
Among the sectors seeing the biggest FII exits are IT, FMCG and power, suggesting a selective re‑allocation of global capital away from areas where earnings and valuations are under pressure.
The combination of stretched domestic valuations, weak FII flows and shifting global capital raises a cautious tone for India’s equity market outlook. Some strategists argue that if the AI theme stumbles or global opportunities soften, FIIs may redirect liquidity back into Indian markets — which could act as a catalyst for a rebound. Others caution that absent strong domestic earnings growth and positive triggers, the outflow dynamic may persist.
The headline number and evolving sentiment underline the importance of tracking not just domestic fundamentals but also global investor behaviour when assessing Indian equity market health.
