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Below the Quote on FPI flows 28th September 2025 from Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Investments Limited

"FPIs pulled out $21 billion from India during the last one year. This is the largest outflow from emerging markets during this period. This FPI outflow also has largely contributed depreciation in INR of 3.5% against the dollar. The elevated valuations in India vis a vis other markets and the tepid earnings growth are the principal reasons behind the FPI pull out. 

If we look at the trend of FPI activity in India there are important phases. In the first three months of  2025 FPIs were sellers. In the next three months they turned buyers. In July, August and September so far, they have again turned sellers. Depreciation of INR also contributed to the selling mainly because many other emerging market currencies appreciated against the dollar this year. 

Earnings growth in India are expected to pick up from Q3 FY26  gathering momentum in FY27. Already there are reports of unprecedented record bookings for automobiles. The lower GST rates and cheap credit is facilitating a big turnaround in industries like automobiles and white goods. This will ultimately reflect in superior earnings growth which the market and FPIs will start discounting. Also further depreciation in INR is unlikely and, therefore, FIIs investing in India now are likely to benefit. 

Therefore, it can be safely assumed that we are near the trough of the FPI pull out."

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