Foreign Investors Withdraw Over ₹13,700 Crore From Indian Markets Amid AI Trade Perception

Foreign portfolio investors (FPIs) turned net sellers in Indian markets this week, withdrawing a significant ₹13,740.43 crore across four trading sessions from November 3 to November 7, 2025, according to data from the National Securities Depository Limited (NSDL).

The selling pressure was most pronounced on Monday, with outflows of ₹6,422.49 crore, followed by ₹3,754 crore on Friday. Equity saw the heaviest selling, with FPIs withdrawing ₹12,568.66 crore through stock exchanges and primary markets combined. However, the primary market showed resilience, with FPIs investing ₹798.67 crore through IPOs and other routes.

Dr. V.K. Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, explained that FPIs are selling in India and buying in other markets driven by the 'AI trade,' viewing countries like the US, China, South Korea, and Taiwan as 'AI winners' while regarding India as an 'AI loser.' This perception is significantly influencing FPI actions in the current global rally.

In the debt segment, FPIs showed mixed behavior, with net buying in the Debt-FAR and Debt-VRR categories, but net selling in the general debt limit category. The Indian Rupee also marginally weakened during the week.

Ross Maxwell, Global Strategy Lead at VT Markets, noted that while volatile global bond yields and currency fluctuations make secondary markets riskier, FPIs are deploying capital through IPOs, finding more reasonable valuations.

The sustained FPI selling pressure led to a decline in India's benchmark indices, with the Nifty falling 0.89% and the BSE Sensex falling 0.86% during the week.

**Impact** This news has a significant impact on the Indian stock market. Large-scale FPI outflows reduce liquidity, potentially leading to downward pressure on stock prices, especially for large-cap companies with high foreign ownership. This selling sentiment can also affect investor confidence and put pressure on the Indian Rupee. While equity markets face headwinds, the continued investment in IPOs indicates that foreign investors are still identifying specific long-term growth opportunities in India, suggesting a nuanced approach rather than a complete exit. The perception of India being an 'AI loser' is a key factor driving this short-term sentiment. The overall impact rating is 8/10.

**Difficult Terms** * **FPI (Foreign Portfolio Investor)**: Investors who buy securities like stocks or bonds in a country without seeking to control or manage the company. Their primary goal is financial return. * **NSDL (National Securities Depository Limited)**: A company that holds and facilitates the transfer of securities in electronic form in India, essentially acting as a digital locker for shares and bonds. * **AI trade**: Refers to market movements and investment strategies influenced by developments and expectations related to Artificial Intelligence technologies. * **Debt-FAR**: A specific regulatory category for foreign investment in debt instruments, often with defined investment targets or conditions. * **Debt-VRR (Voluntary Retention Route)**: A mechanism that allows foreign investors to invest in Indian debt markets (government and corporate bonds) with greater flexibility regarding holding periods and repatriation of funds. * **Secondary Market**: Where previously issued securities (stocks, bonds) are traded between investors on exchanges like the NSE and BSE. * **Primary Market**: Where new securities are issued for the first time, such as through Initial Public Offerings (IPOs). * **Benchmark Indices**: Major stock market indicators, such as the Nifty 50 and BSE Sensex, that represent the overall performance of a significant portion of the stock market.