FPI Selling Moderates As Markets See Recovery Rally In September 2025

Selling by foreign portfolio investors (FPIs) has moderated considerably in September 2025, though they still continue to be net sellers during the month. Up till September 19, 2025, FPIs have sold equities worth Rs 7,945 crore from the secondary market, a sharp decline from Rs 34,993 crore sell-off in August, and Rs 17,741 crore in July, according to data from the National Securities Depository (NSDL).

Specifically, the selling has moderated in the last two weeks, where FPIs actually bought equities worth Rs 1,665.26 crore in the last week, and Rs 8,229.16 crore in the week prior, partly offsetting the Rs 12,528 crore outflow seen earlier in the month.

In the primary market, which saw the launch of nine initial public offerings (IPOs) in September, FPIs have invested Rs 1,559.14 crore. In the current calendar year so far, FPIs bought shares worth Rs 41,865 crore through the primary market.

VK Vijayakumar, chief investment strategist at Geojit Investments, said the “dualistic behaviour” of FPIs is mainly due to domestic equities being “overvalued.”

“FII selling in India and buying in other markets like Hong Kong, Taiwan, and South Korea has been profitable for FIIs, so far. This scenario may change, going forward,” he added.

FII activity is also being affected by sudden changes in tariff policies and fluctuations in exchange rates.

Where FPIs Bought In September 2025

During September’s first fortnight, FPIs were net buyers in automobiles and auto components with Rs 1,908 crore, financial services with Rs 1,634 crore, capital goods with Rs 1,518 crore, and metals and mining with Rs 1,394 crore investments, NSDL data showed.

The rally in auto stocks was sparked by the Goods and Services Tax (GST) Council's announcement of a major tax reform, supported by car makers announcing price cuts on several models, and fuelled by anticipation of festive demand. The new GST rates, which is set to come into effect from September 22, 2025, on small cars and motorcycles with engine capacities up to 350cc has been reduced from 28 per cent to 18 per cent.

Where FPIs Sold In September 2025

On the other hand, FPIs sold equities in sectors, such as consumer services to the tune of Rs 3,246 crore, power Rs 2,107 crore, IT Rs 2,014 crore, and realty Rs 1,927 crore. Other sectors like healthcare, telecom, oil and gas, construction materials, and FMCG also saw outflows of Rs 1,601 crore, Rs 1,505 crore, Rs 1,502 crore, Rs 1,193 crore, and Rs 1,092 crore, respectively.