FPIs Offload Rs 39,000 Crore In August, Buy Rs 4,070 Crore Through IPOs – Here’s Why

Foreign portfolio investors (FPIs) continued to cut their exposure in India’s equity markets in August 2025, offloading Rs 34,993 crore across both primary and secondary markets, according to data from the National Securities Depository (NSDL). This is the second straight month of heavy selling after July’s outflows of Rs 17,741 crore.

Most of the selling came from the secondary market, where FPIs offloaded Rs 39,063 crore during the month. Some of this was offset by fresh buying of Rs 4,070 crore through initial public offerings (IPOs).

With this, the total FPI outflows in 2025 so far has climbed to Rs 1,70,940 crore. However, through the primary markets, FPIs bought equities worth Rs 40,305 crore so far this year.

Financials, IT See Highest Outflows

Outflows were particularly heavy in the financial services sector, Rs 13,741 crore through August 15, 2025, according to the fortnightly NSDL data. Following it, IT saw selling worth Rs 6,380 crore, while oil & gas and consumable fuels saw outflows of Rs 4,091 crore during the same time period.

Power, Healthcare, Realty, FMCG and Consumer Durables also saw outflows worth Rs 2,358 crore, Rs 2,095 crore, Rs 1,211 crore, Rs 1,150 crore, and 1,133 crore, respectively.

Why FPIs Are Rotating From Secondary To Primary Markets

The primary reason why FPIs are selling heavily is that Indian stocks appear expensive compared to other markets. VK Vijayakumar, chief investment strategist at Geojit Investments said that as a result, they are shifting funds to markets where valuations are more attractive. He added that sudden changes in tariff policies and exchange rates are also influencing FPI behaviour.

On the other hand, Vijayakumar explained that IPO valuations are more reasonable, which is why foreign investors are buying there.

So far this year, 204 IPOs have been launched across the mainboard and small and medium enterprise (SME) segments, and 13 more are expected next week.

DIIs Continue To Support

Meanwhile, domestic institutional investors (DIIs) have continued to support the market, absorbing much of the FPI selling. In August alone, DIIs bought equities worth Rs 94,829 crore, the highest monthly inflow in the previous 10 months. This is also their 25th consecutive month of buying.

This followed inflows of Rs 60,939 crore in July, Rs 72,674 crore in June, and Rs 67,642 crore in May this year. Year-to-date (YTD), DIIs have invested a total of Rs 5.13 lakh crore in domestic equities, extending their streak of net buying into a fifth straight year. In 2024, they had pumped in Rs 5.27 lakh crore.