August Rush: FPI outflows at 7-month high at $4 billion

Mumbai: Net equity sales in August by foreign funds were the highest in seven months - and cumulative exits this year the most since 2022 - as the impact of punitive US tariffs on Indian merchandise exports and a steep rupee decline took their toll on locally listed growth assets.

Foreign portfolio investors (FPI) were net sellers on 15 out of the 19 trading sessions in August, dumping $3.99 billion (₹34,993 crore) of Indian equities in August, data from NSDL showed. For the first eight months of a calendar year, this was the biggest cumulative FPI selling at $14.9 billion (₹1.3 lakh crore), next only to the first eight months of 2022, when overseas funds sold $21.4 billion worth of Mumbai-listed risk assets.

To be sure, FPI outflows from India's secondary market have so far been partially offset by $4.7 billion worth of overseas buying in the primary market.

Local Funds Offer Support
However, FPIs have broadly displayed a bearish approach toward Indian stocks since last October when they sold $11.2 billion in a single month. Indian equity gauges had surged to records toward late September 2024, with the Nifty 50 climbing past the 26,000 level on September 27 last year.

In the current calendar year, FPIs remained net sellers of Indian equities in five out of the eight months, with the highest monthly outflow of $9 billion recorded in January. A steep decline in the rupee, which has lost nearly 5% on a rolling 12-month basis, has also dimmed the allure of local stocks. August was particularly tough for the rupee, which lost 0.7% through the month to breach the 88 mark to a dollar.

Domestic funds, meanwhile, continued to provide support to equities with sustained buying in each of the first eight months of 2025. They purchased equities worth ₹55,376 crore until August 22, data from the Securities and Exchange Board of India (Sebi) showed. This was the highest monthly purchase by this class of investors in 10 months - and the second highest after ₹90,771 crore of buying seen last October.

Local funds have purchased equities worth ₹3.3 lakh crore as of August 22 in the current calendar year. This is significantly higher than the net buying of Rs 2.5 lakh crore in the first eight months of the previous year, aided by a consistent inflow in equity mutual funds.

Inflows via SIP route
According to mutual fund industry data, inflows through the SIP route increased 31% year-on-year in the first eight months of 2025 to ₹1,87,378 crore, and SIP contribution in July at ₹ 28,464 crore was the highest in any month so far.