Domestic Buying Shields Markets as Foreign Investors sold Rs 152 crore every trading hour in 2025

Domestic investors have absorbed record foreign selling in 2025, keeping Indian markets stable despite over Rs 2.23 lakh crore in FPI outflows. Strong SIP-driven inflows and resilient economic fundamentals have empowered DIIs to counter persistent foreign exits. Though FPIs remain active in primary markets, short‑term global concerns drive withdrawals, while earnings growth is expected to guide markets ahead.

Foreign investors have been pulling out of Indian equities at an extraordinary pace in 2025, yet the stock market has shown little sign of strain. That stability has come almost entirely from domestic institutional investors, who continue to deploy steady inflows from retail savers.

So far this year, foreign portfolio investors have exited more than Rs 2.23 lakh crore through the secondary market. Broken down across the trading calendar, their outflows amount to roughly Rs 900 crore a day, or close to Rs 152 crore for every hour the exchanges are open. Despite that persistent pressure, frontline indices have held their ground.

The pattern has carried into December. Foreign funds have been net sellers on every trading session this month, shedding about Rs 15,959 crore. But domestic institutions have countered aggressively, purchasing nearly Rs 39,965 crore during the same window and more than offsetting the foreign retreat.

This widening gap between foreign exits and domestic inflows highlights an important evolution in India’s market structure. A key source of strength has been the unwavering participation of retail investors, who continue to funnel money into mutual funds through systematic investment plans.

According to VK Vijayakumar, Chief Investment Strategist at Geojit Investments, SIP contributions have consistently topped Rs 29,000 crore over the last quarter. These inflows, he says, have empowered domestic institutions in what he calls a “tug of war” with foreign investors.

Vijayakumar notes that maintaining heavy foreign selling becomes increasingly difficult when domestic liquidity remains so strong. He argues that betting against a market supported by solid economic performance and improving earnings visibility is unsustainable. In his view, the capacity of domestic funds to absorb foreign selling is a sign of a more mature and balanced equity market.

Importantly, the foreign pullback is not absolute. While selling aggressively in the secondary market, overseas investors have still committed around Rs 67,000 crore to the primary market this year. Their participation in IPOs and capital-raising efforts suggests they remain optimistic about India’s long-term growth prospects.

Short-term concerns have contributed to the selling streak, including a weaker rupee, delays in concluding a US–India trade deal, and broader global uncertainty tied to AI-driven market rotations. These factors appear to be temporary rather than indications of a deeper shift.

Looking ahead, Vijayakumar believes that the decisive force for the market will be corporate earnings. With growth momentum expected to strengthen as the economy moves toward FY27, he expects fundamentals—not foreign outflows—to set the tone.