FPIs Pull Out ₹8,749 Crore In June, US-China Tensions & High US Yields Trigger Exit

Mumbai: Foreign investors have turned net sellers in the Indian stock market in June, withdrawing Rs 8,749 crore in just the first week. This shift comes after strong inflows of Rs 19,860 crore in May and Rs 4,223 crore in April, according to data from depositories.

The selling trend was mainly driven by two global factors: renewed tensions between the US and China and rising bond yields in the US. Both these factors pushed investors towards safer global assets instead of taking risks in emerging markets like India.

Himanshu Srivastava, Associate Director at Morningstar Investment Research, said that investor confidence was also shaken by a US investigation into the Adani Group, which is accused of violating sanctions related to Iran. This news affected market sentiment and pulled down stock prices.

Before this, foreign investors had also withdrawn Rs 3,973 crore in March, Rs 34,574 crore in February, and a massive Rs 78,027 crore in January. With this latest pullout, total FPI outflows from Indian equities in 2025 so far have crossed Rs 1.01 lakh crore.

However, there was some positive news. The Reserve Bank of India (RBI) surprised the market by cutting the repo rate by 50 basis points and reducing the Cash Reserve Ratio (CRR) by 100 basis points. This unexpected move boosted market mood and gave temporary relief.

Despite global challenges, experts believe India remains in a strong position. VK Vijayakumar, Chief Investment Strategist at Geojit Investments, said, “India is likely to grow above 6% in FY26, even as the US and China face slowdowns. But high stock valuations remain a concern.”

FPIs also sold heavily in the debt market, pulling out Rs 6,709 crore from the debt general limit and Rs 5,974 crore from the voluntary retention route during June 2-6. The main reason is the low difference between US and Indian bond yields, making Indian debt less attractive.

Published on: Sunday, June 08, 2025, 01:30 PM IST