Foreign portfolio investors (FPIs) significantly reduced their exposure to Indian equities in the second half of December 2025, with heavy selling in defensive and traditional sectors even as tech stocks began attracting fresh capital.
In the last half of December, FPIs withdrew around ₹16,848 crore from Indian stock markets across about 15 sectors, with the fast-moving consumer goods (FMCG) and financial services segments facing the strongest selling pressure. FMCG stocks saw ₹4,425 crore of selling, adding to earlier outflows, while the financial services space experienced roughly ₹4,009 crore of divestment during this period. Overall, the cumulative foreign outflow from FMCG had already crossed ₹30,000 crore for most of 2025 before the late December selling.
Analysts suggest that high valuations and slower expected growth in defensive sectors may have pushed global investors to shift away from areas like FMCG. In financials, selling was partly attributed to profit-booking and cautious positioning ahead of rate and earnings developments.
On the positive side, the information technology (IT) sector saw renewed FPI interest, registering inflows of about ₹4,457 crore in the second half of December — the first fortnightly positive net investment in IT since June 2025. Observers attribute this pivot to attractive valuations in IT stocks and a search for contrarian opportunities amid lingering concerns around global tech sentiments, especially with some segments of AI-linked equities losing sheen overseas.
In summary, FPIs rotated away from traditional consumer and financial sectors late in 2025 while putting fresh money into IT stocks, reflecting evolving foreign investor preferences in Indian markets as they weigh risks, valuations, and growth prospects
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