New Delhi: Foreign portfolio investors withdrew over Rs 22,530 crore (USD 2.5 billion) from Indian equities so far this month amid rising US bond yields and a stronger dollar, continuing their selling
streak from last year. This came following an outflow of Rs 1.66 lakh crore (USD 18.9 billion) recorded in 2025, triggered by volatile currency movements, global trade tensions and concerns over potential US tariffs and stretched market valuations.
This sustained selling pressure by foreign portfolio investors (FPIs) has significantly contributed to the nearly 5 per cent depreciation of the rupee against the dollar during 2025. According to data from NSDL, FPIs pulled out Rs 22,530 crore from Indian equities between January 1 and 16. Market experts attributed the continued withdrawal to a combination of global and domestic factors.
"Rising US bond yields and a stronger dollar have improved risk-adjusted returns in developed markets, prompting capital reallocation away from emerging markets," said Sachin Jasuja, Head of Equities and Founding Partner at Centricity WealthTech. Echoing similar views, Himanshu Srivastava, Principal-Manager Research at Morningstar Investment Research India, said elevated US bond yields and dollar strength have made US assets relatively more attractive.
He added that geopolitical and trade-related uncertainties continue to weigh on emerging market risk appetite. According to V K Vijayakumar, Chief Investment Strategist at Geojit Investments, lingering uncertainty over the US-India trade agreement has also dampened investor sentiment. On the domestic front, relatively rich valuations in certain market segments, along with mixed cues from the ongoing earnings season, have led to profit-taking and portfolio rebalancing by foreign investors.
The persistent depreciation of the rupee, down nearly 5 per cent in 2025 and weakening further to around 90.44 per dollar recently, has eroded dollar returns despite stable index levels, adding further pressure on FPI flows. Vijayakumar said the selling trend could continue until clear positive triggers emerge for a sustained market rally. He added that the AI-led trade that dominated markets in 2025 has carried into early 2026, though a reversal in this trend could occur later in the year.
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